CURRENT ISSUE - WINTER 2012

Winter 2012

Occupying possibly a third of your lifetime, retirement today is more a progression of stages than a single destination and must be planned for accordingly. In the first of a four-part series, we examine the retirement spring—a time for tilling the fields and planting the seeds for a fruitful retirement.

In just a single generation, our picture of retirement has changed dramatically. Only in the 1950s did life expectancy at birth in Canada finally stretch past age 65 making life after work a reality for many. According to the latest numbers from Statistics Canada, on average a male born in 2008 could expect to celebrate his 79th birthday, while a female born in the same year would likely reach age 83. Furthermore, those making it to the retirement age of 65 will have another 20 years of retired living on average and stand a good chance of living even longer. As a result, our view of retirement has evolved from a short period of respite at the end of a working life to a succession of four phases, the duration of each dependent on factors such as age, state of health and financial circumstances. Like the seasons of the year, each phase is marked by defining characteristics, activities and distinct challenges.

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Winter 2012

Best practices for ensuring your income tax return adds up.

Each year Canada Revenue Agency electronically analyzes approximately 25 million income tax returns and selects some for further scrutiny. Getting tapped for a review can simply be the result of random sampling or for reasons that include higher than usual deductions, discrepancies between the income that you report and information slips filed by employers and excess RRSP contributions. There’s no way to guarantee CRA won’t choose your return for review but here are some tips for making sure you are ready.

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Winter 2012

After experiencing what has been called a lost decade in terms of investment returns, it would be unusual if investors weren’t discouraged. The average return from a balanced portfolio (60% equities/40% fixed income) from 2000 to 2010 was 3.8% per annum, primarily from bonds. And the current state of economic affairs doesn’t offer much in the way of encouragement. Interest rates remain at historically low levels; the yield on mid-term Government of Canada bonds hovers around 2.6%. Economic growth in the developed world will be weighed down for years to come as governments seek to slash deficits through reduced spending. Aging populations place growing demands on the public purse and de-leveraging continues by governments as well as among consumers. Emerging markets, while still likely to experience higher GDP growth relative to the developed world, still do not have sufficient domestic consumption to offset lower demand from the developed world. The one bright spot is inflation, which has remained in check for the better part of two decades, and the low rates on long-term bonds indicate that this is not expected to change soon. So where can the long-term investor look for returns?

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Winter 2012

Growth in the economy has the potential to be constrained by debt, whether it comes from countries reeling in spending through austerity measures, consumers reducing debt on household balance sheets or tighter lending as a result of uncertainty in the financial markets and the European sovereign debt crisis. Collateral requirements could increase along with stricter loan covenants. Both corporate bond markets and equity financing already reflect higher risk premiums.

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Winter 2012

When your children blew through their allowance as if it was burning a hole in their pockets, you thought it was just a phase. Away at school, the calls for cash infusions kept coming and the credit card bills kept climbing. Sure you can afford it, but that’s not the point. With a sizeable inheritance coming their way, how can you make your kids more fiscally responsible?.

“One of the biggest issues I see with young people today is not having a sense of what is realistic for their financial situation. Too many assume that they can live their parent’s lifestyle now, without putting in the time and hard work to build up their earning power,” says Paul Gainor, Consultant with T.E. Wealth in Calgary. He explains that parents aren’t doing their kids any favours by always coming to the rescue. In this case, he recommends that the parents start by setting some limits.

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Winter 2012

You talk. We listen.

By Kostas Andrikopoulos, President and CEO, T.E.Wealth. kandrikopoulos@tewealth.com

Good companies become great companies when they listen to their clients and the best companies anticipate what their clients want and need and make sure they give it to them. At T.E. Wealth, we want to be seen as a great company in our clients’ eyes. So not only do we want to hear what you have to say and take what you tell us to heart, we are creating more opportunities for you to tell us how we can do better.

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