Golden Girl Finance
 
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Personal Finance

Worried you're not saving enough for retirement?

May 30th, 2014 by

Here's what to do about it...

 
 

According to Statistics Canada, women lag behind men when it comes to planning for their retirement. The median RRSP contribution overall was $2,830 in 2011. While men contributed $3,220 on average, women only contributed $2,240. This means that although women made up almost half of all RRSP contributors (47%), their share of the overall contribution was significantly smaller (39%).

There are lots of potential reasons for this discrepancy. For example, women earn less salary. In 2008, the average salary for women was $30,100, and for men, $47,000. Women also often put their families’ needs ahead of their own. But women, on average, live longer than men: In 2009, the life expectancy for women was 83.3 years, while for men it was 78.8. This means most women need to plan for a longer retirement than men do. But they’re expecting to have less money saved.

According to the 2014 Sun Life Financial Canadian Unretirement Index, men plan to have just over $450,000 saved, but women are only expecting to have $385,000 put away, on average. Also, only 38% of women said they knew enough about financial matters to be able to make a plan for their retirement, versus 53% of men surveyed.

What can you do to get your finances on track?

  • Start saving right away

The sooner you start saving, the more opportunity your investments will have for long-term growth, increasing your chances of building a substantial nest egg.

  • Open an automatic savings plan

Set up an automatic savings plan or payroll deduction plan to contribute to a company pension plan or Registered Retirement Savings Plan (RRSP). Instead of only contributing at the annual RRSP deadline, you’ll be investing your money sooner, giving it more time to grow. And the funds inside your RRSP are tax-sheltered, so you don’t have to pay tax on the funds until you withdraw the money - presumably after you retire and your taxable income (and the percentage you pay in income tax) is lower than it is today.

  • Max out your RRSP

Look for your RRSP contribution room on the Notice of Assessment you receive from the Canada Revenue Agency after you file your tax return. Unused room gets carried forward each year, so if you haven’t contributed as much as you were entitled to in years past, you can make it up now. You may want to consider an RRSP catch-up loan to help you maximize your contributions. But only borrow an amount you’re sure you’ll be able to pay back within a short period of time, such as the amount of your expected tax refund.  

  • Create a plan

Meeting with an advisor can help you create a financial plan to meet your own personal retirement savings goals. Plus, an advisor can help you choose investments based on the type of investor you are - low-risk, medium-risk or high-risk - so you can create a portfolio that both reflects and maintains your investment comfort level.    

Women today are living longer and healthier lives than ever before. Having a personal retirement savings plan can also help ensure you enjoy a sound financial future.

 

More ideas to help get your finances on track:

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Original source: Women lag behind in financial planning written by Brenda Spiering for BrighterLife.ca © Sun Life Assurance Company of Canada, 2014.

Divorce

5 financial considerations of grey divorce

May 23rd, 2014 by

And how social media can help

 
 

Separating from his wife after 41 years of marriage was the most difficult decision of Jack’s life. With three grown children and most of his working life behind him, Jack spent hours in counselling and nearly 10 years grappling with the options before moving out into a small apartment.  

“When you get to be 65, you want to say ‘I’m in a pretty good place’ - and we both weren’t saying that,” he said. “It’s not all roses. I really miss the family, I miss our shared history.”

Jack decided to pursue a legal separation from his wife rather than a divorce so she could continue to receive medical benefits through his employer. They came to an agreement and remain on friendly terms.

A growing phenomenon

Jack is among a rising number of Canadians who decide to end their marriages later in life. According to Statistics Canada, the rate of divorce has been steadily growing among those 55 and over. Often called “grey divorce”, it’s expected to increase as more people age. Marriage remains the dominant family structure but according to census data, it only represented 67% of Canadian families in 2011, down from 91.6% in 1961, before the advent of the Divorce Act. 

“Divorce is sad but it doesn’t have to be bad. For both people, there will be sadness - there is a deep family history and values,” said Marion Korn, a family lawyer and partner in Mutual Solutions. Korn and business partner and certified financial planner Eva Sachs work with clients in the Toronto area to help them move past divorce. They’ve noticed a spike in clients in their 50s calling it quits - which prompted them to co-author When Harry Left Sally, the first Canadian resource of its kind that presents the many different faces of grey divorce.

5 financial considerations of grey divorce

There are unique challenges facing those who opt to divorce later in life, including understanding and taking ownership of personal finances. Here are some important considerations for those dealing with a separation:

  1. Inventory your assets

Collect details about your personal financial situation – tax returns, year-to-date pay stubs, benefits statements from your employer, insurance policies, pension statements and information on all registered accounts (RRSPs/RRIFs, TFSAs and RESPs). Pull together information surrounding family real estate – current property assessment and the property tax statement for the family home, cottage, rental properties, utility bills, receipts for maintenance or repair work and statements of rental income and expenses for all properties.

  1. List your liabilities

Compile information for all outstanding loans and debts other than a mortgage, such as lines of credit, credit cards or car loans. A comprehensive overview of what you own and what you owe will help you make decisions about the future.  

  1. Update your beneficiaries

As with any big change, it’s important to keep beneficiaries on investment accounts and insurance policies up to date.

  1. Consider consolidating

After separation, it can be common to find assets in several different places after taking full ownership of your accounts. Consolidating with one trusted advisor has many advantages. An advisor will make sure you take care of things like changing beneficiaries on insurance policies or RRSP accounts. Bringing all your investments together under one roof may also qualify you for reduced management fees.

  1. Update your will

Revisiting your estate plan is a good idea to ensure your will falls in line with your new circumstances. Consulting a lawyer you trust can help ensure your intentions are effectively updated and captured.

Finding a silver lining in social media

Access to new technologies means many divorcees aren’t destined for a lonely future. “Research shows that 80 percent of grey divorcees will date and 30 percent will re-marry. Social media creates a sense of security - 15 to 20 years ago, you could have been facing the prospects of loneliness but now we have tools to connect,” said Sachs.

Joanna falls into that category. After 20 years, her marriage fell apart after she found out about her husband’s affair with a family friend. They pursued a difficult divorce that ended in court years later. Joanna worked with her advisor to understand her finances and plan for her future.

“My advisor sat down with me and helped me put together a plan - what I made, what I owed, what I owned,” she said. “I needed that, to be honest. It helped me realize that I was going to be okay and that I could afford to be independent.”

After 27 years away from the dating scene, the thought of moving on was daunting at first. Joanna’s daughter helped her set up a profile on a dating website where she reconnected with Paul, a friend she had lost touch with after high school. Joanna and Paul were married in a small ceremony four years ago.

“Five years ago, I never would have thought I’d be where I am today,” she said. “Life is so much better than I could have imagined.”

*Names have been changed to protect the privacy of the individuals interviewed.

 

More on managing your money through life changes:

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Original source: Starting over after a late-life divorce written by Krista Seggewiss for BrighterLife.ca © Sun Life Assurance Company of Canada, 2014.

Baby/Motherhood

How to plan a successful maternity leave

May 16th, 2014 by

What does it take to enjoy a smooth maternity leave? Here's advice based on interviews with more than 500 women who've been there...

 
 

Althea*, an account manager at a digital advertising firm, describes herself as a planner. “As soon as I found out I was pregnant with Emma (her 1½-year-old daughter), I started making lists of what I needed to do to be ready at home and at work,” she says. “I wanted to have the perfect maternity leave.”

Althea had planned to take a full year off, but her sense of isolation being at home with the baby and the pressure of tighter financial circumstances prompted her to return to work after just six months. “As much I adored Emma, I was glad to be back, but I still feel like I failed at my maternity leave, since it didn’t go to plan,” she says.

Althea’s experience is a common one, I discovered while doing the research for my upcoming book, The MomShift: Finding the Opportunity In Maternity.

Sort out the legalities

A smooth maternity leave starts with understanding your legal rights. When I was pregnant with my second son, I was working full-time as a consultant among three different organizations and had just moved back to Canada. What I didn’t realize until fairly late in my pregnancy was that this arrangement meant I didn’t qualify for any paid maternity leave.

In Canada, birth or surrogate mothers are entitled to 15 weeks of maternity benefits. Biological or adoptive parents can then tap into up to 35 weeks of available parental benefits. In Quebec, which has its own parental benefits program, mothers can receive up to 18 weeks of benefits, and parents, up to 32 weeks. (More information on maternity and parental benefits is available from the Government of Canada.) 

To qualify, you must have worked 600 hours over the past 52 weeks. Self-employed parents can also collect parental benefits provided they have paid into the Employment Insurance program for the 12 months before their child is born. (See the Quebec Parental Insurance Plan for the regulations applicable there.)

Sort out the financials

In most of Canada, government maternity leave benefits equal approximately 55% of earnings, with a maximum payment of about $501 per week. In Quebec, maternity benefits can equal as much as 75% of earnings, with a weekly maximum payment of about $973.

Depending on the income to which your family is accustomed, a smooth maternity leave might require some saving in advance.

Some companies top up the basic government benefits. Check with your human resources department to see how much you might receive; keep in mind that if your employer has topped up your benefit payments, you may be required to reimburse the difference if you don’t return to your old job.

For my research, I interviewed more than 500 women who all achieved greater career success after starting their families. I asked two questions: “What would you advise other women about having an enjoyable and successful maternity leave?” And if they had more than one child, “What did you do differently the second or third time around?”

“We had money set aside to top up my maternity payments, but it wasn’t nearly enough,” said Carla, a hair colourist and mother of twins. “With the two boys, I ended up spending more [than I planned] on baby items. And then we were both so tired that we ended up ordering in four or five times a week and it all added up to more than we planned for.”

Find the work option that works for you

It’s not just women such as Yahoo! CEO Marissa Mayer who are judged for their maternity leave decisions.

I interviewed women from a diverse range of professional and personal backgrounds who expressed their frustration at having had a neighbour, colleague, friend or relative judge their maternity leave choices.

One of the most contentious issues was the question of whether to check in with the office during your maternity leave or disconnect completely.

“My mother-in-law was only able to take two weeks when my husband was born and so she kept criticizing my decision to take the full year,” said Angela, an accountant and mother of two boys.

Zoe, who runs her own consulting business, had the opposite experience: “I continued working until the day my son was born and then from my hospital bed afterwards. I felt judged by everyone from the nurses to my friends, but I’m a small business owner and this was only way to do it.”

Each woman’s work, family and baby scenario is unique, so what’s more helpful than dogmatic advice is to consider the following when planning your own leave:

  • How much time are you taking? The longer you are away, the stronger the case is to stay at least somewhat engaged (even if it’s just checking but not responding to emails), since it can make transitioning back much easier.
  • What you plan to do and what you actually do may differ. Much depends on how you’re feeling and what your baby is like. If you have an “easy” baby, responding to emails or reviewing documents might be possible.
  • Will you have help with the baby?
  • How has your role been dealt with while you away? If your employer has hired a replacement or temporarily re-juggled your responsibilities, offering to be available to deal with any urgent questions can help with any transition issues and create a sense of greater confidence for your team.

Ultimately, only you know what’s right for your career and family when it comes to maternity leave, so the best approach is to stay focused on what matters to you the most - and then be flexible in how it comes together.

* Last names omitted for privacy.

 

More tips for new mothers:

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Original source: Planning a successful maternity leave written by Reva Seth for BrighterLife.ca © Sun Life Assurance Company of Canada, 2013.

Home/Real Estate

Home security: 5 ways to keep your home safe

May 9th, 2014 by

Are you doing all you can to protect your property from theft? Check out the latest advice from the pros...

 
 

We all know the basic rules for not attracting thieves to our homes: pick up the mail and newspapers, keep the grass cut and so forth. But what else can we do to discourage home intruders?

Here are five suggestions...

5 ways to keep your home safe

  1. Watch what you say online

Can’t wait to tell your friends about your planned trip to Bora Bora? Don’t do it on social media websites such as Facebook and Twitter, says Rob McDonald, crime prevention and social media officer for Toronto Police Service. Or better yet, wait until you’re back from your journey. Despite the availability of privacy settings, nothing is 100% private on the Internet, he notes. “The rule of thumb should be, ‘Would you share this information with a random person on the street?’ If the answer is no, then don’t post it,” he says. “Also watch for saying things online like ‘How are you getting to the airport or train station?’ ”

  1. Inspect your doors and windows

Locking your doors and windows is a given, but that in itself won’t necessarily scare off perpetrators, says McDonald. Depending on the type of door and lock, an intruder may still be able to get in. A steel door, for instance, is harder to open than a wooden door, and a deadbolt lock with a long bolt is better than one with a short one, and both are better than a spring-bolt lock. Also examine your door frames for wear and tear. “Sometimes we’ll find a door has been compromised because the frame is weak,” he says.

You may secure your basement windows or patio doors by inserting a piece of wood in the track. But most people cut the wood too short so they can easily open the window — not so great for intruder protection. “If you leave the wood too short, the window can be jimmied open,” he notes. McDonald’s suggestion? Put a screw in the top and bottom frame of the window to hold the wood securely in the track.

Finally, change your locks after you take possession of a house or complete renovations. You want to limit the number of people who have key access to your home, says McDonald.

  1. Store valuables in less-obvious places

Remember, thieves want to be in and out of a house as quickly as possible. McDonald notes that the master bedroom and bathrooms are the first places intruders will check for valuables. So, make it difficult for them to be found by storing them in less conspicuous places – not under the bed or in the freezer, for example.

If you have a home safe, make sure it’s a heavy, fireproof model that’s bolted to the floor. Otherwise, the intruders may just take the safe with them and jimmy it open off-site, says McDonald.

  1. Secure your important papers and photos

Take digital photos of your valuables, record the serial numbers and store information on a jump drive, perhaps at an offsite location such as in a safety deposit box, says McDonald. “If we have a picture of something it’s easier to recover it than if we just have a written description,” he says.

Lock up your bank statements, will, bills, passports, jump drives, user IDs and passwords in a filing cabinet, suggests Lee Anne Davies, founder of Agenomics, a consulting firm in Victoria, B.C. Keep the key in another discreet location in your home. While a bunch of paperwork may not seem as alluring to thieves as electronics, money or jewellery, she notes that identity theft is on the rise. “I suggest you ask your credit organization to put on your file that no credit can be put into your name until a phone call confirms you have requested that credit,” she says. “That can protect you from identity theft.”

  1. Think like a thief

Step onto your porch and look through the window. Do you see your iPad on the couch or the $50 you threw down on your kitchen island? Then so can other people. Either keep your curtains closed or move valuables away from public view, says McDonald. Families will often leave things like wagons and strollers unsecured on their porches or patios, thinking that nobody will take them. But some strollers cost as much as bikes in today’s break-and-enter market, he says. Bring them inside or lock them in the garage or shed.

 

Related reading:

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Original source: Home security: Five ways to keep your home safe written by Deanne Gage for BrighterLife.ca © Sun Life Assurance Company of Canada, 2013.

 

 

Other

How to create a DIY home emergency kit

May 2nd, 2014 by

Here's what's in my kit...

 
 

The idea of a home emergency kit had been floating around in the back of my mind for years, but it was the December 2013 ice storm and subsequent power outage in Toronto that really got my wheels turning. Several of my friends and relatives were stuck at home without power over the holidays - some for close to a week.

I know creating a home emergency kit can sound a little paranoid, but I also know I didn't want to be the person who thinks, "D'oh! I was totally meaning to buy one of those emergency radios!" when an actual emergency strikes.

So with the fresh start of a new year, I decided to put together Lisa’s Own DIY Basic Home Emergency Kit. I collected some useful items from around the house and ordered a few things online.

This is my basic, starter kit...   

Your home emergency starter kit

  • A zipper bag of important documents. I once lived in a condo in Toronto where the top seven floors were flooded by a burst pipe in an empty unit. My husband and I had to evacuate the building as water came rushing down the hallway. Like total panicked idiots, we grabbed our laptops, smart phones, wallets and wedding rings, but forgot our passports, birth certificates, marriage certificate, insurance policies. You know, the actually important stuff. After that, I started storing all my important documents in a giant plastic zipper bag, so I can grab them all at once if anything were to happen again. Any piece of paper that might be a pain to replace goes in here. Think also about making copies of your important documents and storing them online.
  • A combination solar-hand crank radio with charger. I have always wanted one of these magical devices and was able to find an emergency solar radio with a hand crank and cell phone charger online for only $40. The radio function is great for getting information and I like that it has a built-in flashlight, which is one fewer thing to worry about. You can charge your devices via the hand crank, in the sun or with a USB, if you have access to power somewhere else such as in your car.
  • Bottled water. I haven't done this yet, but the next time I go big-box shopping, I will buy a couple of cases of water to store in my garage. You should store two litres per person, per day for up to three days in case you need to really hunker down. Make sure to drink up and replace the water before its expiry date. (Yes, bottled water does have an expiry date.)
  • Plastic bin of supplies. I got myself a medium-sized plastic storage bin and either bought or collected from around my house the following things to put into it:
    • Flashlight with extra batteries (replace the batteries once a year)
    • Glow sticks (lasting 12 hours or longer)
    • First-aid kit
    • Power and protein bars (replace once a year)
    • A loud whistle for signaling for help
    • Dust or medical masks in case the air is contaminated
    • Moist hand wipes and garbage bags
    • Emergency phone numbers (in case your phone is damaged and the memory is lost)
    • A manual radio

Other suggestions

See, that wasn't too difficult, was it? After all the power outage issues and extreme cold weather in Toronto this winter (and the flooding last summer), I'm glad I finally did it.

This is just a guideline that I'm using for myself, so do check out what the professionals have to say before you run out to the store or go online. I recommend at least getting the basics I’ve outlined above, and viewing the Canadian Government Emergency Checklist and the FEMA Emergency Kit Checklist to further build out your kit. The Canadian Red Cross sells a 72 Hour Disaster Preparedness Kit for $60 that is quite comprehensive and well-priced, compared to some emergency kits I’ve seen online that cost as much as $200.

Do you have an emergency kit at home? What did you put in it?

 

More on being prepared:

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Original source: How to create a DIY home emergency kit written by Lisa Ng for BrighterLife.ca © Sun Life Assurance Company of Canada, 2014.