Guiding Millennials to a Brighter Financial Future

Guiding Millennials to a Brighter Financial Future

Before the pandemic struck, Millennials were already facing financial challenges with steady work sometimes hard to come by and housing prices often out of reach. The current situation is adding to the complexity that those currently in their early 20s to late 30s are being forced to navigate.

Fortunately, there’s plenty that Millennials can do to shift their finances in a positive direction – even in the midst of the ongoing crisis – and position themselves to thrive financially in the long term.

For a start, it helps to go back to basics.

Meet Alex

At 28, Alex is a few years into his career as a UX designer. He lives and works in downtown Toronto, where he usually makes the most of the city’s lively restaurant scene and nightlife (or he did, pre-COVID). Living close to the action for a minimal commute and maximum time with friends is important for Alex, so he’s saving up to buy his first condo in the city.

Alex is fortunate to have a job when so many across the country are currently out of work. His biggest challenge is that he’s fairly erratic in how he manages his finances. While he has a savings account where he sets aside money when he can toward a condo down payment, he doesn’t have any investments to speak of and racks up large credit card bills each month.

He’s clear on the lifestyle he envisions for himself in the years ahead, but not on how to achieve it.

A clear, simple plan

Alex is in a pretty good position, but he could be doing a fair bit better with a few strategic changes to his financial habits. And while we may be on the downslope of the current pandemic, applying long-term thinking to his money can put Alex in a better position to ride out future bumps in the road.

If Alex’s situation sounds familiar, here are three things you can consider to get on a better financial trajectory.

  1. Keep it simple. Financial planning doesn’t have to be complicated. It can be as straightforward as figuring out how to set aside a bit of money each month to pay off debt and make small contributions to an investment account. With a simpler plan, you’re more likely to stay on track since you’ll understand what you’re doing and why you’re doing it.

 

  1. Gain clarity. It may feel like everyone but you has their finances in order, but the reality is that many people have financial blind spots. If you’re feeling uncertain, one the of the best things you can do is ask questions and seek out advice.

 

  1. Start early. You already know that the sooner you start saving and investing, the better. What you may not realize is that even small amounts can make a huge difference over time, and that it’s never too late to start.

Putting in place a clear, simple plan can be beneficial for anyone who’s struggling with financial uncertainty. If you’re stressed out by the current situation and worried about the future, this is likely a good place to start.

Get on track

This pandemic will pass, yet new challenges are almost certain to arise in the years and decades ahead. For Millennials, living your desired lifestyle requires a proactive approach to ensure your finances can weather any future storm. This means going back to basics with a clear, simple and effective plan tailored to your unique needs.

If you’d like to discuss your financial goals and gain clarity on how to achieve them, Rubach Wealth can help. Contact us today at ww.rubachwealth.com

Together, we got this.

This blog post is part of Rubach Wealth’s Back to Basics series highlighting how focusing on financial planning fundamentals can help you stay on course toward your long-term goals during these uncertain times.

Act now or miss out on the benefits of permanent life insurance

Act now or miss out on the benefits of permanent life insurance

Even if insurance is a topic that puts you to sleep, there is a major change coming in the insurance world deserving of your attention given its potential to significantly impact your wealth and what you are able to pass on to your loved ones.

Unless you work in the insurance industry, there’s a good chance that you aren’t aware of this or haven’t given it much thought.

Act now or miss out on Permanent Life Insurance-2

What’s Happening with Permanent Life Insurance?

On January 1, 2017, new rules will come into effect that will change how permanent life insurance policies – which have both an insurance component and an investment component – provide tax-sheltered benefits.

Broadly speaking, the new rules will result in a general increase in the cost of insurance and a decrease in the speed at which premiums can be paid into a policy.

What does this mean for you? Ultimately, you may end up paying more in taxes and enjoy less potential growth of your wealth.

Personal or Corporate Permanent Life Insurance Policy?

The rule changes will affect the taxation of all permanent life insurance policies , whether they are held by individuals or corporations. So if you currently hold a permanent life policy – or plan to set one up in the future – these changes are relevant to you.

Although corporate-held policies may be less common than those held by individuals, they offer considerable tax advantages. For corporate-held policies, the biggest change under the new rules is how old you have to be at the time of your death to receive the full death benefit on a tax-free basis. Currently, if you are 73 or older when you die, the full death benefit can be paid out tax free as a corporate dividend to your chosen beneficiaries. Under the new rules, the amount of your death benefit that can be paid out tax free will be partially reduced unless you are 90 or older at the time of your death.

Why Does This Matter?

The key thing to note is that the upcoming changes will reduce your ability to minimize tax and maximize wealth. The existing rules offer an attractive opportunity to use permanent life insurance to protect your wealth for future generations, but the clock is ticking and this opportunity will disappear as you celebrate the stroke of midnight on New Year’s Eve.

The good news: permanent life insurance policies established prior to January 1, 2017, will be grandfathered under the existing rules. As long as you set up a permanent life policy optimized for the existing rules before the end of 2016, you can lock in your access to the more favourable existing rules. However, some changes to the terms of existing policies may be treated as the creation of a new policy under the new rules and thus take away the grandfathering protection, so it’s important to get everything in order before the deadline.

What Should You Do?

The deadline may still be several months away, but the time to act is now. Insurance companies are experiencing a rush of applications as 2017 draws near and have warned that processing applications may take longer than normal.

The underwriting process – which can take anywhere from a few weeks to several months – must be completed before December 31, 2016 for a new policy to be grandfathered under the existing rules. So, now is the time to start the conversation and get the ball rolling.

Permanent Life Insurance for future generations

You may not find insurance an interesting topic, but in this instance it is a timely topic that offers an excellent way to maximize the wealth that you can pass on to future generations.

We are here to help you take advantage of this opportunity before it disappears, so we invite you to speak with us today about how we can help you grow and protect your wealth.

We have the know-how and resources to identify the right policy for your needs, help you establish a corporation if required, and work with lawyers and accountants to structure things according to your requirements.

All it takes from you is a phone call to get things started:

Rubach Wealth Permanent Life Insurance Meeting