At the heart of the debate over expanding the Canada Pension Plan is concern
that people aren’t saving enough for retirement. See whether you’re in that
group. Gather up all your registered retirement savings plan and tax-free
savings account statements to see what you have. Then, find out how much CPP
you’re in line to receive. Maximum CPP and Old Age Security payments – combined
– were worth roughly $18,700 this year.
Next, add any pension income you have and use an online
calculator like the one offered by Globeinvestor.com to see how far your money
might go. If you have a financial planner, then all this should have been done
2. Talk to your retirement-age parents about their finances and estate planning
There’s a combination of factors that make it more important than ever for us
to keep an eye on the finances of seniors. They’re taking on debt at a faster
rate than any other demographic, and they’re declaring bankruptcy at rising
rates. Also, in living longer, they are increasingly coping with dementia
Look for signs of financial stress – unpaid bills lying around, calls from
collection agencies, credit card statements showing a pattern of minimum monthly
payments and use of credit cards to buy staples. Also, make sure your parents
have set up a financial power of attorney for financial affairs, as well as for
health care. Both these documents appoint an individual to act on someone’s
3. As the new Aeroplan switchover unfolds, play hard to get.
Canadian Imperial Bank of Commerce, Toronto-Dominion Bank and Aimia Canada
got together this year to re-arrange which banks will get to offer premium
travel reward credit cards linked to the popular Aeroplan program. Cardholders,
frustrated over the lack of communication from all parties, should find out
shortly whether they’re staying with CIBC or moving to TD. Unless CIBC and TD
try to buy your loyalty with special bonuses, use the switchover as an
opportunity to explore other travel reward cards.
Two ways to find top travel reward card options are the RewardsCanada website and this feature by MoneySense. Also consider a cashback card, where
your rewards come in the form of real money, not points and miles.
4. Think twice about using a big bank for your next mortgage
The most telling symbols of big-bank greed today are the penalties they apply
when clients break a mortgage. As noted in a recent column , these penalties are brutal. They
could easily cost you the same amount as a good used car.
I’ve used a lot of ink over the years telling people how important it is to
get the lowest mortgage rate. But mortgage penalties are a close second on the
list of reasons to choose a lender. About seven in 10 people with five-year
mortgages make changes to them before maturity, though not necessarily to pay
them out in full.
Fortunately, the alternative lenders that compete with the banks are not
nearly as aggressive with mortgage penalties. And they offer the lowest
5. The stock markets are up, but there’s a better option if you’re sitting on cash
Even after a great five-year stretch for stocks, there’s still a lot of money
sitting in safety-first investments that earn little or nothing. Now, with
registered retirement savings plan season ahead, Canadians are going to see all
kinds of investing hype designed to get their money out of savings accounts and
into mutual funds and other investments.
If you’ve got a lot of cash and are tempted to dive into the markets at this
late date, reconsider. A better use for the money would be to pay down credit
cards and lines of credit. Stocks could easily take a breather after their
recent run, and the bond market looks uninviting. Debt repayment is the
6. Forget the lottery win
People sometimes say in surveys paid for by financial companies that they’re
relying on a lottery win to fund their retirement. I think they’re kidding
around. But I also wonder if there isn’t a lottery-win mentality behind some of
our biggest financial decisions.
The way some people are stretching their spending and borrowing to the limit
suggests they expect some sort of good fortune to help them get ahead at some
point. But there are few big wins in today’s economy. You can’t count on
bonuses, big raises, or permanent jobs that replace temporary or contract
positions. Limit yourself to taking on financial obligations you can easily
manage in a slow-growth world.
Written by Rob Carrick / Source: www.GlobeandMail.com
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