Legal and tax considerations

We are consulting a lawyer or notary:

• to review or prepare our wills and create or update our estate plan, to ensure that our assets are divided according to our wishes and allocated fairly amongst the members of our family.
  
  
• to set up a power of attorney in the event of incapacity for each of us. This document gives someone else the power to take care of us or our assets if we are unable to do so ourselves.
  
  
• to set up a “living will” so that our loved ones will know our wishes with respect to the medical care we wish or do not wish to receive if we are unable to express what we want.
  
  
  

We will contact a tax specialist who will provide us with information on tax credits and deductions to which we are entitled. S/he will also tell us about strategies for paying less tax in retirement.

We will each draw up an inventory of assets, which will make it easier for our loved ones or legal representative if one of us dies or can no longer manage his/her affairs.  We will fill out a ”personal record” of our assets and important documents, and draw up a list of people and places to contact in the event of death or incapacity.

We will review the beneficiary designations on our insurance, investments and pensions, based on the amounts that we each want to leave our heirs:

• Individual and group life insurance contracts
• Investment contracts, if applicable
• Private pension plans, if applicable
• Federal and provincial pension plans
• other ____________________________
  
  

Personal finances

Planning

• Our first step: draw up a list of our goals and priorities, based on our desired retirement lifestyle. For each goal we wish to achieve, we will indicate its priority and a target date for achieving it.  Instead of listing a vague objective like “travel,” we will specify a destination and date. This list will become our roadmap, at least during the first phase of our retirement.
  
  
• The first step to achieving our goals is good planning. Our action plan, which starts with a budget based on our objectives and priorities for retirement, is the cornerstone of any good planning. It must be flexible, and we’ll have to adjust it as we gain more experience as retirees.
  
  
• We must review our financial plan regularly, as changes occur in our life and the various stages of retirement.
  
  
• We will draw up our personal balance sheet to determine the net worth of our assets and our real wealth, and take any steps that are required.
  
  

  

Income

• My spouse doesn’t have an employer-sponsored pension plan, but I do. We must choose the pension option that is best for us from among those that my employer offers. For example, should we choose a 60% or 100% joint and survivor pension, or do we prefer to waive this option in order to have a larger pension? We will talk to our financial representative to help us make these decisions.
  
  
• To maintain the lifestyle we want, at least during the first years of retirement, we will have to dip into our savings. That’s also why we’ve put money aside. However, because we can no longer make high-risk investments that could jeopardize our future income and lifestyle, we’ll have to review our investment portfolios.
  
  
• We already know about certain income that we’ll receive until the end of our life: the pension paid by my employer, the one paid under our provincial plan (RRQ) or the Canada Pension Plan (CPP) and, at 65 years of age, our Old Age Security (OAS) pension. These payments will not be sufficient, however, to provide us with the minimum income we want to receive until we die. To cover the shortfall, we are thinking about using a portion of our RRSPs to acquire a life annuity. We could convert the rest of our RRSPs to RIFFs, which are very flexible products.
  
  
• We will apply for pension benefits with our provincial and/or federal governments. I will prepare my RRQ or CPP application, and my spouse will apply for OAS.
  
  
  

Protecting and maintaining our standard of living

• I will check with my employer to see if my group insurance (life, disability, complementary insurance, etc.) will remain in effect even after I retire. If it does remain in effect, what are the conditions?
  
  
• If I’m no longer entitled to group insurance or if it’s insufficient to meet our needs, I can add Complementary Healthcare Insurance to help me pay for expenses not covered by my group insurance plan.
  
  
• We hope to remain in good health as long as possible, but we know that age brings with it a gradual loss of autonomy and the increased likelihood of becoming ill. We do not want to become a burden for our children, and that’s why we will talk to our financial representative, who will provide us with information on health insurance products.
  
  
• We can use online calculators to determine the insurance coverage we’ll need if we become ill or suffer a critical illness.
  
  
• We plan to take full advantage of the assets we’ve accumulated over the years, but we’re concerned about our last tax bill and the fact that our loved ones may have to sell part of their inheritance to pay it. We’ll make an appointment with our representative to review our life insurance coverages and to devise a strategy that will provide our children the liquidity they’ll need to preserve the inheritance we leave them.  We’ll also review the article Leave your assets to your loved ones, not the taxman.
  
  
• Our grandchildren are a real joy for us and we’d like to help them out financially while we’re still alive. At their age, the cost of universal life insurance is very affordable. This product will also help us accumulate tax-sheltered savings for them, a good way to establish an education fund. To find out more, we’ll review the article How to transfer wealth while minimizing tax.
  
  

Other sections to consult

• Rethink Retirement
• Planning my estate
• Advice tailored to my situation: Grandparents
• Giving
• Articles – Estate Planning
• I’m Preparing to Meet With a Representative
• Leaving a Legacy
  
  
  

Useful links

• Régie de l'assurance maladie du Québec (RAMQ)
• Régime des rentes du Québec (RRQ)
• Canada Pension Plan (CPP) Retirement Plan
• Old Age Security Pension (OAS)
• RRQ: Sharing your retirement pension
• CPP: Sharing your pension
• Canadian Investor Protection Fund
• Assuris
• Living, Working, or Retiring abroad