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Financial planning for people with better things to do


Putting it all into practice – Part Two


has been to simplify the mystery of “Financial Planning” so that you can look after yourself and your loved ones without getting ripped off by salesmen paid on commission. I close off THE END OF WORK with an example of financial planning that takes a minimum of time and effort in preparing for your eventual END OF WORK, while protecting yourself from a premature END OF WORK. In Part One last month I went over setting yourself up on the start of your financial journey. Tis month we continue with financial planning for your working years. At thirty you find your life partner and by


F


inancial Planning for People with Better Tings to do is the sub-title for THE END OF WORK. My purpose over the past two years plus


in a 44% MTR. You have kept up your RRSP in balanced funds and used your TFSA for your fixed income assets. Add in your company pension and you are doing OK on the investment side, but what about the protection side? Te ten years remaining on your half million


Financial


thirty-five have a $300,000 mortgage and have fulfilled the biological imperative of repro- ducing yourselves. But you are now making $6000/month, netting $4000 at a 33% MTR. But because you started at 25, you were able to cash out your TFSA and a chunk of your RRSP under the Home Buyer Plan for your 20% down payment so you avoided the CMHC $10,000 tax that is erroneously called “insurance”. You sit down with your partner to re-set your financial plan. How much insurance do you need now? For how long?


Literacy Fred Petrie


term insurance should now be more than you need. Te mortgage should be half paid off and there are only ten years left on the kids’ dependency needs. Insurance is flexible, you could always reduce your coverage. But the kids are morphing into teenagers (don’t worry, they turn back into human beings in another ten years or so). And they have picked up ex- pensive habits like hockey or ballet – and of course you want to do everything you can for the next Karen Kain or Wayne Gretzky. Oh, and you used the home equity Line of Credit to finance an addition. Good thing you took the level term coverage instead of the decreasing term option your advisor had told you about. Good thing your group plan has grown with your salary to compensate for inflation. So you have enough protection, and the remaining


ten years is probably long enough too. But you are now about half way through this journey


Besides final expenses, you now have a mortgage and a dependency period of twenty years till the kids are (hope- fully) on their own. With no mortgage, you determine that the surviving partner would need about $2000 a month for child care and RESPs (a source of free money you will also want to take advantage of), or about half of your cur- rent take-home. $100,000 at 5% with $8020 annual draw down would last twenty years. So replacing the $2000 a month of your income that your partner needs would take $300,000. Add the mortgage and final expenses and you need $650,000 to replace the portion of your income that your partner will need if you are gone. But what about that cancer scare you had last year, and


the sky-diving hobby you took up at 28? Oh yeah, you bought that cheap term insurance at 25 , so no problem. And your group benefit plan for your new management position allows you to opt for up to three times salary. So $500,000 personal term insurance, renewed as a Term Twenty, and $150,000 on your group plan should suffice. Even though your mortgage is amortized over 30 years, you plan to add payments when you can (like your an- nual bonus) to pay it off in less than twenty. Except for Mr. Murphy, you could actually be on a Freedom 55 plan! Your Term 20 $500,000 plan is still only going to cost you $40/ mo. Now you have $400 after tax to pay yourself, where should the extra $100 go? Right into an RESP for the kids. Another ten years flashes by. Now you are 45, well into


middle management and making almost 100 grand, let’s say $8000/mo. for round numbers, and getting up there


we call life, and you may be starting to sense your own mortality: what about critical illness? long-term care? a legacy for your kids (or your alma mater)? Tis would be a good time to start your own insurance company. Take the extra $200 of your 10% net and buy a universal life tax sheltered investment. If insurability is still an issue, just convert $100,000 of the term. Mr. Murphy has spared you the worst and at 55 you are


actually pretty financially independent. You have at least thirty more years and maybe forty. Te kids are finishing school and setting off on their own journeys. Independ- ence will give you the option of starting another journey if you wish. Start your own business or write a book. Perhaps you have nursed a special interest all these years. Your career has been satisfying and has provided the means to continue your special interest part-time. Now you could do it full-time. And it is not too late to be a rock musician, look at Mick and Keith! Tere may be one problem with this happy plan. You may


already be 35, or 45, when you are reading the book. No problem, the steps are the same. You may just have to save more or take more risk. Or take a later retirement. Whether you have otherwise been enjoying the journey of life, or recovering from life’s setbacks, with today’s lifespans, even Freedom 70 is not unreasonable. Wherever you are going, remember to enjoy the journey! Fredrick Petrie, B. Comm. (Hons.), author of “THE END


OF WORK: financial planning for people with better things to do”, provides financial education at www.navigatingfi- nance.com, reach him at navigator@navigatingfinance. com or call (204) 298-2900. You can get started at http:// www.amazon.ca/END-WORK-Financial-Planning-Peo- ple-ebook/dp/B00XCY0AJ2/


Largest tax cut in Manitoba history T


he 2018 budget for the Manitoba Government intro- duces tax cuts for individuals and business, record spending in health, education and families, and a


dramatically reduced deficit, Finance Minister Cameron Friesen said today. It will also include reduced ambulance fees, investment in climate and green plan and funding for over 700 new child-care spaces. Tis year's budget will also reduce the deficit by $319 mil-


lion which makes it the biggest reduction in the deficit since summary budgeting was introduced in 2007. “We promised to fix the finances, repair the services and


rebuild the economy,” said Friesen. “We are keeping our promises.” By increasing the threshold under which individuals pay no


income tax by 2020 over the next two years, the Government of Manitoba is taking more than 30,000 Manitobans off the tax rolls – that is more than 30,000 more Manitobans who will pay no income tax – and adding more than $230 million to the economy by putting it back in the pockets of Manitobans. Budget 2018 also gives small and medium-sized businesses


a break by raising the small business income tax threshold to $500,000 from $450,000. Tis will save individual businesses up to $6,000 a year – money they can reinvest in new jobs or technology – and pump $7 million back into the economy each year starting in 2019. “Manitobans face challenges of rising hydro rates, in-


creased federal and municipal taxes, and interest rates rising. Tey deserve a break,” the minister said. “With this budget, and the biggest tax cut in Manitoba’s history, we are giving them a break by taking money from the cabinet table and putting it back on the kitchen table.” Other highlights include: • a historic investment of $102 million to establish an in-


dependently run conservation trust that will fund projects to support the Made-in-Manitoba Climate and Green Plan; • a record investment of $6.2 billion in Manitoba Health,


Seniors and Active Living including an additional $14 million for the Home Cancer Drug program, $7.7 million for expanded


April 2018


Stephen Barber to run against Stephen Fletcher for Nomination


W


hat does it take to be an effective Member of Parliament? Some say it takes talent - a skilled orator, a clear-eyed leader, a persuasive de-


bater… but I believe it takes more than talent. It takes hard work, dedication, and resiliency. Charleswood – St. James – Assiniboia – Headingley deserves a Member of Parliament who will not only lead, speak and debate, but more importantly will listen, advocate effectively for them, and work as hard as they can everyday on behalf of the people who they represent. I am running to be the Conservative Party of Canada


nominated candidate in Charleswood – St. James – Assini- boia – Headingley. I am running because I am passionate for this community where I grew up and live, and believe I can make a positive difference for you and for where we live, work, and play. Tere are many areas that I feel strongly about. Respect


for our troops. Safe communities. Supporting families. Relief for taxpayers. Tese are not just slogans for me; I try to advocate for these everyday. So what does this mean? Let me talk for a moment about


just one of these: Respect for our troops. To me, this means providing our troops with the proper equipment for the job that we ask them to do. Providing the resources that they need when they return to Canada - resources like mental health resources and helping veterans with job opportunities. It means supporting the Military Family Resource Centre and the work they do, and making the transition for military families as smooth as possible. Tese are some of my thoughts. I want to hear your


thoughts, and your concerns. I want to know what matters to you, and how I can effectively advocate for you. And, I am happy to talk with you about my other thoughts. Will you join my team, so that together we can stand and have our voices heard? Stephen Barber holds degrees in Commerce, Eco-


nomics, and Law, and is seeking the nomination in Charleswood-St. James-Assiniboia-Headingley for the Conservative Party of Canada. He can be reached through his website, www.stephenbarber.ca


News and notes from the Legislature


Province allocates funds to 63 Child Care Centres across Manitoba


Te Manitoba government is allocating funds to 621


early learning and child care spaces at 63 centres across the province, Families Minister Scott Fielding recently announced. “We know the value of early learning and child care


dialysis treatment and $3.1 million for rare disease drugs, and the creation of 60 new full-time paramedic positions • decreasing ambulance fees to $340 from $425, totalling a


32 per cent decrease since forming government and keeping on track to reduce to $250 as promised; • a $60.5-million increase in funding to Manitoba Families


including $13 million more for Community Living DisABIL- ITY Services, an increase in funding to improve the supply and quality of affordable housing; • support funding for over 700 new child-care spaces


including funding for the construction of 251 new spaces; • a $13.7-million increase in education funding and con-


firmation of the construction of five new schools: Seven Oaks (kindergarten to Grade 5); Waterford Green (kindergarten to Grade 8); Southeast Brandon (kindergarten to Grade 8); Pembina Trails Waverley West (kindergarten to Grade 8), and Pembina Trails Waverley West (grades 9 to 12); • a new Child Care Centre Development Tax Credit that


gives businesses an incentive valued up to $10,000 over five years to create daycare spaces for workers’ children; • $70 million to launch the Lake Manitoba outlet project; • funding to complete ‘Freedom Road’ this year, to com-


plete the Waverley Street underpass and upgrade the Portage la Prairie wastewater treatment plant; • partnering with the federal government to invest $176.8


million in strategic agricultural initiatives over the next five years; • investing in Look North, the long-term economic de-


velopment strategy for growth and prosperity in northern Manitoba; • supporting a northern tourism strategy; and • a $16-million commitment for the coming fiscal year for


the Manitoba Film and Video Production Tax Credit. “Even as we take a moderate and balanced approach to


fiscal management and fixing our finances, we are investing in the priorities of Manitobans,” said Friesen. “Whether you are a small business owner, a student, a senior or a working Manitoban, Budget 2018 is designed with you in mind.”


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to a child’s social, cognitive and emotional development and how it gives them a better chance to succeed in life,” said Fielding. “We also know its importance to parents and guardians who are able to attend school or work, knowing their children are safe, cared for and learning.” The money is part of The Canada-Manitoba Early


Learning and Child Care Agreement with the federal government, announced Feb. 23. Te bilateral agree- ment commits $47 million over three years to create up to 1,400 new and newly-funded spaces for children under the age of six. Of that, $2.3 million annually will provide new operating grant funding for 621 existing licensed spaces, which were previously created by facility-driven expansion and on a waiting list to receive subsidy. Te minister said the funding ensures centres can remain affordable for Manitoba families and financially stable, so they can continue to offer child care in their com- munities.


Manitoba to move forward with autonomous vehicle testing Te Manitoba government will bring forward legisla-


tive amendments which would allow for testing and use of autonomous vehicles on provincial highways, Infra- structure Minister Ron Schuler announced last month. “Te rapid technological advances being achieved


by carmakers in regards to autonomous vehicles must be met by legislation allowing for their use in our prov- ince,” said Schuler, who was in Ottawa for meetings with federal and provincial highway and transportation ministers. “We will meet those challenges and seize the opportunities relating to autonomous vehicles by bring- ing forward these proposed amendments.” Similar to other traffic safety statutes across the coun-


try, Manitoba’s Highway Traffic Act (HTA) was written on the basis of a human driver being in physical control of a vehicle. As a result, proposed amendments to the HTA will be brought forward that would authorize projects for research and testing of vehicles and vehicle technologies on Manitoba highways, said Schuler, noting the long- term goal is to develop regulations allowing for public use of high-level automated vehicles.


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