Addiction is a huge problem in Canada. How big? Between January 2016 and June 2020, there were more than 17,602 apparent opioid-related deaths in Canada, and this represents only a fraction of the overall problem of opioid addiction.
When you add an addiction to other drugs, as well as other types of addiction (e.g. gambling), the pervasiveness of this problem starts to become painfully clear.
Amid this enormously complex social dilemma, one of the heartbreaking challenges that families face is how to manage their finances when a family member is suffering from an addiction.
In this article, we shed light on this sensitive topic and highlight some strategies that may help with managing this situation.
Starting with open and honest communication
One of the biggest challenges related to addiction is that it tends to live in the shadows. The stigma surrounding addiction often silences the very people who are most in need of help, whether that’s the person with the addiction or their family and friends.
A key to overcoming this stigma is the creation of safe spaces for honest discussions. No judgment, no shame – just open conversations.
Some grandparents are becoming parents again. They have taken on the responsibility because the kids are no longer around ― they have overdosed, they have run away, or they are not fit. Their retirement plan is all of a sudden destroyed. All of a sudden, they have to pay for college, and the cost of college is a pretty big shock compared to when their kids were growing up. When we look at increased withdrawals or spending habits, or unexplained lifestyle changes, one can see they are not thinking clearly, that their judgment is cloudy. They’ve got a lot of other things going on.
Given the financial implications that addiction can have on a family, financial advisors can play a role in having these difficult conversations. Sometimes there are financial red flags such as unusual withdrawals that can alert us to a possible problem; other times it might be just a feeling that something in the family dynamic is a bit off.
Either way, we can help by gently probing for answers and offering thoughtful support. Although addressing the actual addiction goes well beyond our scope of training or licensing, we may be able to recommend appropriate professionals and resources.
Mitigating harm with practical solutions
One area where we can provide direct assistance is in helping families manage their finances in a way that can mitigate the harmful impact of addiction.
For example, consider a family with a teenager who is struggling with addiction. If this teenager is set to receive a large inheritance upon reaching the age of majority, there can be serious concerns about what may happen if they suddenly have access to a large sum of money.
In this case, there are ways for the family to manage the disbursement of this money in a controlled way, including but not limited to:
Trusts – Trusts can be useful as a means of managing assets on behalf of an individual with an addiction and controlling the flow of money to them. While a family member can serve as the trustee who manages the trust, this can lead to tension in the family if the trustee has to make contentious decisions. Appointing a corporate trustee is sometimes a better alternative as this can help to separate family relationships from trust business.
Annuities – Annuities are another option for controlling the disbursement of money to a family member with an addiction by setting up fixed annual payments. Although they are less versatile than trusts, annuities can be more cost-effective.
As every family has unique circumstances and financial needs, we can work with them to understand the challenges they are facing and propose a customized strategy to protect their financial well-being while minimizing harm.
Getting help from a trusted advisor
Across Canada, hundreds of thousands of families grapple every day with the stress and anguish of seeing a family member suffering from addiction.
What’s crucial for these families to understand is that they are not alone and that help is available. Updating a trusted advisor about addiction in the family may involve uncomfortable conversations, but it can also be the catalyst that leads to positive changes and eventual solutions.
InvestmentNews did a survey in which 36% of the advisors who were polled said that their clients have been impacted by the opioid epidemic. Let me tell you why that number is very low and underreported: Clients are not telling their advisors that they are going through an issue. Going through addiction and substance abuse is so full of shame from the stigma. The only way to tackle a problem as pervasive as addiction is to work together. So let’s start the conversation.
Tips for a Successful RRSP Season in 2021
With RRSP season here once again, now is the time to give some extra thought to your retirement.
Arguably, retirement planning can be stressful – especially as you draw closer to your retirement day – and the uncertainty of the past year certainly hasn’t helped. Outliving your savings is, rest assured, a lot more stressful. If you want to enjoy your retirement years in comfort, what should you be doing now?
MAXIMIZING YOUR RRSP CONTRIBUTIONS
Contributing to a registered retirement savings plan (RRSP), and ideally maxing out your annual contribution limit, is one of the fundamentals of sound retirement planning.
If you’ve been doing this diligently over the years, well done! However, it’s also important to review the investments in your RRSP to ensure they continue to align with your investment objectives and risk tolerance.
Here’s an overview of key information and some helpful tips to ensure you have a successful RRSP season in 2021.
- Contribution deadline: March 1, 2021
- 2021 contribution limit: 18% of earned income (less any pension adjustment) to a maximum of $27,830
MAKING THE MOST OF YOUR RRSP
How to maximize the value of your RRSP will depend on your specific needs and situation. However, here are some general tips to consider.
- Consider recent market developments. Historically, annual returns on equities following downturn years have yielded higher than average returns. Whatever you do, don’t try to time the market. Given the upheaval seen in financial markets in 2020, you may want to discuss with us an RRSP strategy that makes sense based on your needs.
- Use an RRSP catch-up loan. An RRSP catch-up loan can help you utilize any unused RRSP contribution room. Depending on your personal income tax situation, this may result in a tax refund that could be used to help pay down the RRSP loan. This is not a strategy for everyone. Let’s talk before you do it!
- Invest your tax refund or bonus. If you’re banking on getting a tax refund this year or expecting a bonus from work, what are your plans for this money? Rather than spending it on nice-to-have things, consider putting some or all of it into your RRSP. You may have to forego a bit of fun in the short term, but it can help give your retirement lifestyle a big boost in the long term. We can show you what that looks like for you.
- Plan for taxes. As you put money into your RRSP, always remember that what you’re doing is deferring taxes today, not avoiding them forever. When you start withdrawing RRSP funds during retirement, you’ll have to pay tax on this money. The key to remember (and the big benefit of an RRSP) is that the tax rate will be based on your tax bracket at the time of withdrawal rather than your current tax bracket. In theory, you will be at a lower marginal tax rate… but what if you’re still at the highest? By simply looking at your RRSP account statements and not thinking of future taxes, you may think you will have access to more money than what you will actually have.
TAKING ACTION FOR A SUCCESSFUL RRSP SEASON
If the events of 2020 have left you stressed out and mentally exhausted, we get it. Yet an open conversation with your financial advisor to check in on your retirement plans might be just what you need to shift your focus to brighter days ahead.
Investing a small amount of time into retirement planning now to ensure you get the most out of this RRSP season will pay dividends many times over in terms of peace of mind and financial stability going forward.
Have you already maxed out your RRSP contribution room? This is a good problem to have! If you’re now looking for other investment alternatives to help you shelter additional growth from taxes, we can help.
Whatever your situation, we invite you to contact us at info@rubachwealth or 647.808.7700 to discuss your options. The RRSP deadline is approaching, so now is the time to act.
No one gets married planning on an unhappy ending, yet the reality is that approximately 40 percent of marriages in Canada end in divorce.
For small business owners, this can pose a challenge: how can you protect your business if you end up getting divorced?
Despite how common it is, many small business owners are unprepared for the possibility of a divorce. Whatever your current situation, here are some things to keep in mind to help mitigate the impact of a divorce on your business.
Protect your business early
If you own a business, there’s a good chance it’s your most important and most valuable asset. And like any big asset, it should be protected.
A divorce can have a major impact on a business if it’s included in a settlement. The overall divorce process can also make it difficult for you to focus on the day-to-day running of your business.
The importance of protecting your small business before initiating (or even considering) divorce cannot be overstated – and the earlier, the better.
Ideally, protective measures should be in place well before marriage. Once divorce is on the table, if your business isn’t protected, it’s probably on the table, too.
The most common way to protect your business is with a prenuptial agreement, often called a prenup.
A prenup is a binding contract signed by each partner before their wedding outlining what happens to all assets, property, and income in the event of divorce, separation, or death.
A prenup is the fastest, easiest, and least expensive way to protect your small business in the event of a divorce. If one or both partners in your marriage are small business owners (either together or with different businesses), the complexity is multiplied, so a prenup is strongly advised.
Shareholder, partnership, LLC, and buy/sell agreements offer different types of protective measures. Each of these agreements can include provisions that protect the interests of the business owners – including you and any co-owners – if one of you ends up getting a divorce.
For example, your agreement can require that unmarried shareholders implement a prenup if they plan to marry. Your agreement can also require a waiver from an owner’s fiancé that removes them from any future interest in the business.
Another option is to impose restrictions on the transfer of shares. For example, your agreement can prohibit the transfer of shares without approval from other partners or shareholders.
Alternatively, the other owners(s) can be given the right to purchase the shares or interest of any divorcing parties, which gives the existing owners the option to maintain control of the business.
Mitigate risk with holistic financial planning
Whether you’re running a business or building a loving, enduring marriage, real life is hard work, and it doesn’t always go as planned. With divorce, being a fact of life for many Canadian couples, planning for this possibility is an important step for any small business owner.
At Rubach Wealth, we help business owners plan for an uncertain future and mitigate risk as part of a holistic approach to wealth management. This means looking at your life in its entirety and bringing everyone to the table – including lawyers, accountants, and investment specialists – to help you make the best decisions given your unique needs.
Divorce is not an easy topic to address. However, by having frank conversations and asking tough questions now, we can help you minimize the financial harm that sometimes accompanies the heartbreak of a divorce.
If you have questions about protecting your small business in the event of a divorce, please contact us at 647.349.7070 or firstname.lastname@example.org. for a confidential conversation.
Whatever your goals, dreams and challenges, financial literacy is a critical factor influencing what you can achieve in life.
Why? Because financial literacy can help you make smart decisions today that will shape your life and the opportunities you enjoy for decades to come.
As November is Financial Literacy Month, this is a good opportunity to highlight the meaning of financial literacy and show how it can positively impact your life.
Empowering your financial life
Being financially literate doesn’t mean you have to become an expert in financial matters.
However, it does mean getting to know the basics so you can ask relevant questions and have meaningful conversations with financial professionals.
Ultimately, becoming familiar with financial topics is about empowerment and being an active participant in the shaping of your financial future.
Financial literacy 101
Learning some of the fundamentals of personal financial management can go a long way in demystifying this important topic.
The following are some of the building blocks of financial literacy:
- Managing your debt. Personal debt in Canada is at a record high, which is particularly concerning for younger Canadians who are growing up to see cheap debt as a way of life.
- Financial literacy means understanding the impact of debt on your finances – including your credit score – and how different strategies can help you pay it off more quickly and at a lower overall cost.
- Growing your wealth. Working hard in a job or running a business is only one part of the equation – there are many other factors that will influence the growth of your wealth during your lifetime.
- Financial literacy means understanding how your income is taxed, learning how best to balance spending and saving, and identifying opportunities for growing your wealth through wise investment choices.
- Protecting yourself and your family. The past year has clearly shown that life can throw unexpected curveballs, highlighting the importance of proactively safeguarding your financial well-being.
- Financial literacy means understanding the role of life insurance as a powerful investment tool, the importance of disability and critical illness insurance for protecting your financial well-being, and the value of locking in lower insurance premiums when you are younger and healthier.
- Working toward goals. A career can be incredibly rewarding in itself, yet it can also be a means to achieving any number of life goals.
- Financial literacy means understanding the steps you can take now and throughout your career to help you achieve major goals, such as buying a house, starting a family, retiring early or engaging in philanthropy.
Adopting a holistic approach
Adopting a holistic approach to your finances means ensuring that all decisions and strategies are thoughtfully aligned with your current situation and future goals.
A base level of financial literacy – together with support from a trusted advisor – will help you put in place a comprehensive financial plan that covers all the bases and can evolve throughout your lifetime.
In addition to giving you greater peace of mind regarding your financial security, it will also leave you free to focus more time and energy on your family, your career and other important areas of your life.
Securing your financial future
Whatever your worries today and hopes for the future, boosting your financial literacy will empower you to move forward with greater confidence.
If you’d like to discuss your financial situation with a trusted advisor who can provide thoughtful guidance, please contact Rubach Wealth to schedule a call.
To discuss how greater understanding of your finances can get you on the right track to a better financial future, contact us contact us at email@example.com or at 647.349.7070.
It’s probably fair to say that most Canadians will be happy to bid farewell to 2020, and there are still three months to go until the end of the year.
The pandemic has taken a heavy toll, from the loss of lives and jobs to the disruption of schooling and retirement. Financially, countless individuals and families across the country have been negatively impacted.
While it’s easy to focus on the negative, we believe there are lessons to be learned from the pandemic that will help us emerge stronger in the years ahead. Here are four of them.
Lesson 1: An emergency fund is essential
This year, countless Canadians have lost jobs, struggled with collapsing businesses or faced sharp declines in their investment returns. For many, this has resulted in a major cash crunch and enormous financial stress.
The current pandemic may be a once-in-a-100-years event, yet we can be confident that other crises will emerge during our lifetime. That’s why a key takeaway from this pandemic is the importance of establishing a financial safety net.
Whatever your financial situation, setting aside enough money to cover at least 3–6 months of your living expenses is not just a good idea – it’s essential.
Lesson 2: We can all reduce wasteful spending
Amid the financial fallout from the pandemic, many Canadians have been reviewing their spending with a more critical eye. With incomes squeezed or disappearing for many, it’s no surprise that people have been looking for ways to trim their monthly expenditures.
From rarely used subscriptions to frequent dining out, it’s up to each of us to decide what we consider essential versus frivolous. Yet for most of us there are opportunities to reduce unnecessary spending.
You work hard for your money, so you owe it to yourself to ensure you’re not wasting it needlessly.
Lesson 3: A portfolio loses value more easily than it gains
The global spread of COVID-19 rocked stock markets in early 2020, with the TSX Composite Index plunging by 21.6% in the first quarter of 2020 compared with end-2019. Although the sharp drop has been followed by a relatively rapid rebound, the index is still short of its February 2020 peak.
For investors, this fluctuation during the pandemic has provided an important reminder for investors: if your portfolio drops by 20%, it will take more than a 20% rise to return to the level it was at before. Why? Because a 20% drop in a $1,000 investment takes you to $800, but a 20% rebound takes you only up to $960.
The lesson here is that it can take longer to rise than to fall. So if you’ll need money in the short term to buy a house or for retirement income, your portfolio should generally favour low-volatility investments.
Lesson 4: Regular portfolio rebalancing should be a priority
Aligning your portfolio with your risk profile is an investment best practice, but it shouldn’t be a one-off event. Without regular portfolio rebalancing, a portfolio that was meant to be 70% equities may have risen to 90% in the pre-pandemic bull market.
The problem here is that when stock markets plunged earlier this year, this portfolio would have been exposed to much higher volatility and risk at 90% equities versus the intended 70%. With regular rebalancing, the portfolio would have locked in gains gradually during the bull market and faced the crash with only 70% equity exposure.
Rebalancing your portfolio regularly can mean forgoing some potential gains when markets are strong, but it also means you’ll be at a more comfortable risk level when tough times hit.
Translating lessons into action
The pandemic has shown us how difficult it is to plan for all eventualities. Yet is has also reminded us of the value of financial planning best practices.
To discuss how to apply these lessons to your situation and get on track to a better financial future, contact us contact us at firstname.lastname@example.org or at 647.349.7070.
Marriage is the perfect time to start shopping for life insurance. Why? Because it’s when you start sharing your life – and your debt – with the one you love.
Here’s why life insurance for married couples should go hand in hand with saying, “I do.”
A shared life means shared responsibilities
While it’s quite unromantic to think about all the legal and financial changes that come with signing a marriage license, I firmly believe in talking about it.
The reality is that marriage comes with a joint responsibility of sharing life together, which includes debt.
Even if you have no outstanding debt at the time of your wedding, you will undoubtedly be sharing some financial obligations with your spouse down the road, whether that’s a car, a house, graduate school or credit card debt.
With this financial future ahead of you, now’s the time for you and your spouse to review your insurance coverage. Having the right type and right amount of insurance will help ensure that your finances are protected from any accidents or lawsuits down the road.
You can lock in a good rate now
In general, life insurance premiums increase with age, so the earlier you lock in a rate, the more affordable it can be.
Some plans even let you cancel later, so it’s possible to get out of a policy if at some point you decide you don’t want it anymore. The one thing you can’t do is go back in time and purchase a new policy 10 years down the road at the lower rate that you’d be able to get at this age.
If you’re starting married life with fewer financial burdens – e.g. no house, no kids – taking on a small monthly premium won’t be a significant burden on your bank account now, but it will set you up with more affordable premiums for the future when you may face more financial stress.
Purchasing life insurance when you’re healthy also makes a lot of sense as it guarantees you’ll be covered no matter what happens to your health in the future.
When it’s not always happily ever after
When you’re preparing for your wedding day, it’s natural to think your love will last forever. Unfortunately, divorce becomes a reality for some couples, and not all of them are prepared for the financial fallout.
A report from the BMO Wealth Institute found that 70% of surveyed Canadians are financially unprepared when going through a divorce. What’s more, divorce can impact women particularly hard: 43% experienced a substantial decrease in household income after their marriage ended.
We hope you never have to go through a divorce. If you do, however, it’s critical to examine your current life insurance policies and any spousal coverage benefits to which you may be entitled. Your beneficiaries – the people you’re leaving money to – should also be re-examined.
Building a shared future together
Marriage is about building a life together with someone you love. And while it may not sound romantic, that includes a financial life.
Chances are you will need to buy life insurance at some point as part of your shared future – particularly if plan to have kids one day. So, as you start building your new married life together, keep in mind that this might also be a good time to apply for life insurance so you can take full advantage of your youthfulness and good health.
For a conversation about how to set your young family on the right financial path, contact us at email@example.com or at 647.349.7070.