Harvest Your Savings

Transcription

1 Harvest Your Savings

2 Agenda 1. Your retirement income needs 2. Where will your retirement money come from? 3. Retirement accounts and products 4. Sun Life Financial s retirement services

3 Income at Retirement

4 What percentage of your working income will you need at retirement?

5 How will life expectancy impact my savings?

6 Life expectancy Age 65 in Avg Cdn Life Expectancy at Age Males (Years) (years)** Females (Years) Life expectancy at birth* Year Born Males (Years) Females (Years) * Statistics Canada, The Daily, September 27, 2004 & December 21, 2005 ** Government of Canada, National Advisory council on Aging, Expressions Vol. 10 No. 3 & Statistics Canada, The Daily, December 21, 2005

7 Lifestyle in retirement age Year Avg Age of Cdn Retirees** Average 63 year old can live free of activity limitation until* Males (Years) Females (Years) ** Statistics Canada CANSIM II SERIES V *Policy Research Initiative, Horizons, Vol. 6 No. 2, 2003

8 What does all of this mean? On Average: You re going to live longer than previous generations You re going to have a longer retirement (retire early, and live longer) You re going to spend more of those years with your quality of life unchanged until your mid to late 70 s More retirement savings needed to sustain you in retirement

9 Expenses in Your Retirement Years

10 Your expenses in your retirement years Stay the same Decrease Increase Groceries Property taxes Homeowner s Insurance Utility bills Rent Mortgage Cost of Education Work-related expenses Personal Taxes Downsize home No RRSP Contributions Drug Costs Dental Care Hobbies Entertainment Travel Elder or dependent care

11 Determining your retirement income needs Use the Annual Expenses Worksheet to help you determine your needs Adjust this to reflect your needs AND wants at retirement Remember to include the effects of inflation

12 Sources of Retirement Income

13 Where will my retirement money come from? Primary Secondary Government Company Retirement Program Personal RRSP Home/Rental Property Other Savings CPP/QPP/OAS/GIS/Allowance

14 Government retirement programs Government Programs 1. Canada Pension Plan/Quebec Pension Plan 2. Old Age Security 3. Guaranteed Income Supplement 4. Allowance For more information CPP/OAS/GIS/Allowance or QPP or

15 Canada Pension Plan (CPP)

16 Canada Pension Plan (CPP) - Overview Designed to replace 25% of the earnings on which you contributed over your working life Retirement pension paid to people who are at least 60 years of age Conditions apply in order to draw an early pension Pension is reduced if taken before age 65 and increased if taken after age 65 Need to apply (6 months in advance)

17 CPP - Eligibility to apply from ages 60 to 64 Stop working Not working by the end of the month before the pension begins and during the month that it begins OR Have low earnings Earn less than the current maximum retirement pension amount in the month prior to starting to collect and during the month that it begins

18 Old Age Security (OAS)

19 Old Age Security (OAS) - Overview Payable to anyone who has lived in Canada for a minimum of 10 years between the age of 18 and 65 Maximum pension paid if you lived in Canada for more than 40 years between the age of 18 and 65 Eligible at age 65 (must apply) Clawback provisions exist based on your other income

20 OAS Clawback income threshold If your net income is above $63,511 there is an OAS clawback (repayment) to part or all of your OAS payments Full OAS is eliminated when your net income is $103,101 or above

21 How much might I get from the government? 2008 CPP/QPP OAS Maximum Monthly $884.58/mth $ ($10,615/yr) $502.31/mth ($6,027.72/yr) Survivor Benefit $530.75/mth $ ($6,369/yr) Average $480.86/mth ($5,770/yr) $476.37/mth ($5,716/yr)

22 Retirement Income Options

23 Retirement asset accumulation SLF Retirement Programs vehicles 1. Defined Contribution Pension Plan (DCPP) 2. Registered Retirement Savings Plan (RRSP) Note: These asset accumulation vehicles are in addition to any defined benefit pension you may be entitled to. Please refer to your annual Pension Statement for that information.

24 Retirement Income Options for the DC Pension Plans Annuity Life Income Fund (LIF)

25 Retirement Income Options for the DC Pension Plans Annuity Life Income Fund (LIF)

26 Annuities - Overview Series of future payments in exchange for a lump sum today Irrevocable once purchased Sensitive to interest rates at time of purchase Once your beneficiary passes on, payments will cease under most circumstances Does not require active management Is not affected by financial markets

27 Annuity - Features Life annuity - Annuity continues for your (and your spouse s) entire life Joint life or last survivor - Includes your spouse and only ends once the last person dies Guarantee period - The length of time that the annuity payment is guaranteed to be paid to your estate Inflation protection Increases each year by inflation to protect your purchasing power throughout retirement Call the SLF Customer Care Centre for a quote!

28 What s $100K worth? Joint life annuity Male aged 65 with Female spouse aged 65 Guaranteed None 5 years 10 years 15 years 60% 100% $598 $596 $588 $574 $553 $552 $551 $547 Joint life annuity Female aged 65 with Male spouse aged 65 Guaranteed None 5 years 10 years 15 years 60% 100% $577 $576 $571 $561 $553 $552 $551 $547 These rates are shown for illustration purposes. They are subject to change without notice and current as of the time of writing.

29 What s $100K worth? Guaranteed None 5 years 10 years 15 years Male, aged 65 Female, aged 65 $683 $675 $653 $620 $620 $616 $603 $584 These rates are shown for illustration purposes. They are subject to change without notice and current as of the time of writing.

30 Retirement Income Options for the DC Pension Plans Annuity Life Income Fund (LIF)

31 Life Income Fund (LIF) - Overview Money in a LIF continues to grow tax deferred as long as there is money in the plan Money can be invested in various options (eg. mutual funds, stocks, bonds, GICs) Begin to draw a retirement income from the account Annual minimum amount applies (from Income Tax Act) Annual maximum amount applies (from Pension Acts)

32 Life Income Fund (LIF) - Features A beneficiary can be designated An annuity can be purchased at any time Call the Customer Solutions Centre at to understand your options!

33 What s $100K worth? Minimum withdrawal required at age 65 it is 4% of the market value on January 1 st Maximum withdrawal restriction is the greater of: The previous year s investment earnings; or The maximum established by a government formula at age %

34 What s $100K worth? $100,000 account balance Minimum annual withdrawal is 4% or $4,000 Maximum annual withdrawal Year 1 is 7.20% at age 65 or $7,200 Year 2 and on going: The greater of 7.30% (age 66) or the investment performance from Year 1

35 Retirement Income Options RRSPs and DPSPs Annuity Registered Retirement Income Fund (RRIF)

36 Retirement Income Options RRSPs and DPSPs Annuity Registered Retirement Income Fund (RRIF)

37 Registered Retirement Income Fund (RRIF) - Overview Money in a RRIF continues to grow tax deferred as long as there is money in the plan Money can be invested in various options (eg. mutual funds, stocks, bonds, GICs) Begin to draw a retirement income from the account Annual minimum amount applies (from Income Tax Act) Annual maximum does not apply!

38 Registered Retirement Income Fund (RRIF) - Features Can close anytime and take cash (less tax) A beneficiary can be designated An annuity can be purchased at any time Call the Customer Solutions Centre at to understand your options!

39 Which product is right for me?

40 Comparing retirement income products Making ongoing investment decisions throughout retirement Indexing my retirement income to keep up with inflation Using my retirement savings to maintain an inheritance for my heirs Accessing additional funds to cover emergencies MOST Important Important LEAST Important RRIF/ LIF All Products Annuity

41 How long will my money last?

42 Number of years assets depleted % Withdrawn Annually 15 % 14 % 13 % 12 % 11 % 10 % 9 % 8 % 7 % 6 % 5 % 3% 4% 5% 6% 7% 8% 9% 10% Annual total return Assets will not deplete

43 Number of years assets depleted % Withdrawn Annually 15 % 14 % 13 % 12 % 11 % 10 % 9 % 8 % 7 % % 5 % Assets will not deplete 3% 4% 5% 6% 7% 8% 9% 10% Annual total return

44 Number of years assets depleted % Withdrawn Annually 15 % % % % % % % % % % % % 4% 5% 6% 7% 8% 9% 10% Annual total return Assets will not deplete

45 How Sun Life Financial can help in retirement

46 Our partnership continues 1. The Group Choices Program (Group RRIF/LIF) 2. Advice and ongoing support 3. Retirement planning tools 4. Retirement news and information

47 The Group Choices Program Due to your participation in your group plan, you can join our Group Choices Program (Group RRIF/LIF) Benefits: Fees are substantially lower than retail products (like you re used to with your current group plan) Investment continuity and choice (56 investment options) Simple transition Continued access to the Customer Care Centre and Plan Member website Spouses can join the plan!

48 Advice and ongoing support Customer Solutions Centre s Retirement Specialists Dedicated to serving group plan members approaching and entering retirement Licensed to provide advice on the Group Choices funds Specialists with many financial planning designations Knowledgeable on all retirement products and government programs across the country Available toll free from anywhere in Canada

49 Retirement Specialists They can help you: Use the retirement tools available to help decide if it s the right time for you to enter the next stage of your life Understand your retirement income products and options Learn about your available investment options Arrange a retirement income payment schedule Make an appointment with a Retirement Specialist to understand your options!

50 More advice T.E. Wealth As a valued client, you are also entitled to 2 free hours of financial planning help to make your retirement transition easy! T.E. Wealth financial consultation includes: 2 free hours of financial advice paid by Sun Life Financial (up to $1,000 value) Advice on your entire financial situation Provided by fee-only advisors, so there isn t any solicitation of products ONLY available to group members who are within 18 months of your projected retirement date Call our Customer Solutions Centre at to make an appointment!

51 Retirement planning tools my Retirement Planner Determine the amount of money you need to save to reach your retirement goals Annuity Calculator Estimate the monthly annuity income you will receive from your portfolio RRIF Calculator Calculate the minimum payments required by the CRA - payments are based on your age OAS Clawback Calculator Find out at what income level you can expect a clawback and the reduction in OAS

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54 Retirement news and information Retiring Soon Newsletter Stay up to date and informed about the news and views of retiring in Canada Quarterly newsletter delivered right to your inbox Diverse content like government programs, tax planning, lifestyle considerations and more! Sign up by sending an to Harvest Your Savings Portal Online portal containing much of the information and illustrations discussed throughout the presentation Available to current group plan members

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58 Are you retirement ready? 1. Determine your retirement income needs and desired retirement date 2. Determine if you are on track (use the Retirement Planner!) 3. Make an appointment with a Retirement Specialist if you are close to your retirement date to discuss your transition options 4. Apply for your government benefits as you draw close to your retirement date 5. Celebrate the journey!

59 Thank you What additional questions do you have?