MODULE 3 DESCRIPTION – Financial Issues 

Chapter 1 – Social Security & Medicare Programs 

Approximately one half of the income of Canadians age 65 and over comes from Old Age Security and Canada or Quebec Pension plan benefits.  A solid understanding of these programs is beneficial to anyone who works closely with elder Canadians. 

Maintaining their health is the number one priority for the vast majority of Canadian elders.  As a result, no other group has a greater interest in the sustainability of Canada's publicly funded health care system.  This chapter is designed to provide you with an overview of the system with particular attention paid to some of the challenges facing publicly funded Medicare  "Medicare" .

Chapter 2 – Financial Planning Basics  

There are many challenges for elders who are facing their retirement years. Some have planned, and some have not. The purpose of this chapter is to show the EPC in general terms how to develop the various strategies that can help their clients come to terms with their financial position and needs. 

The EPC will look at the various stages of financial planning, taking into consideration the elder’s objectives while looking at the challenges and many stages that elders will have already experienced prior and throughout their retirement. Professionals from many occupations realize that the key to financial independence can be found in the type of planning and investments the elder should have already made. At the same time, many risk factors should be considered. The role of the financial planner, as well as the steps to financial freedom will be investigated. It is hoped, that by now the elder has completed many of the prerequisites in order to have a healthy and wealthy retirement.  

Chapter 3 – Retirement Income Basics

The main focus of this chapter is for the EPC and the elder to recognize that planning in the early years allows for a comfortable retirement. Assuming that this has been done, when it comes time to enter the ‘twilight’ period there will be an income available for the elder to maintain the lifestyle that they were accustomed to.  

The EPC will look at some investment vehicles and retirement choices that the elder could use to provide an ongoing income for the retirement years.  

Chapter 4 – Legacy Planning 

A key principle in legacy planning is that you cannot eliminate the big mistakes in an estate plan until you have identified them. Every elder should stage a financial fire drill with the assistance of the Elder Planning Counselor community. The same caution should be exercised with estate planning as with financial planning—if you are not a financial services professional, work with someone who is, or stay away from this area completely. 

This chapter will investigate the process of planning the accumulation, conservation, and distribution of an estate in the manner that most efficiently and effectively accomplishes the elder’s personal tax and non-tax objectives. 

Upon completing this chapter, the EPC will acquire the ability to gather accurate, comprehensive, and useful information that is efficiently developed using a data gathering system. 

The EPC will study the major areas of estate planning such as: lack of liquidity, improper disposition of assets, inflation, inadequate income, or capital at retirement / death / disability, stabilization and maximization of the value of assets, excessive transfer costs, and special problems. 

Chapter 5 – Travelling or Moving Abroad 

Canadians comprise a mobile society. They look for travel experiences; adventure, warmer climates, employment opportunities and a sunny retirement in areas they perceive have a lower cost of living. Some decide to move out of the country to avoid, or at least reduce, the amount of income tax they pay. Others find out that they have become residents of another country by accident, facing substantial tax costs. 

Many Canadian elders spend time out of the country, particularly in the United States, during the winter months. These snowbirds may plan on moving to the U.S. permanently, or look forward to spending certain months of the year south of the border as an integral part of their retirement plans and lifestyle. In either case, their time spent in the USA may cause them to be deemed as residents of the U.S. for income tax, estate tax, or both.  

Conversely, they may no longer be deemed to be residents of Canada, and put at risk government benefits, income tax breaks, deductions, and credits. Those wanting to take advantage of lower income tax rates in another country may find that the CRA still considers them to be residents of Canada for income tax purposes. In a worst-case scenario, they may be deemed to be residents of both countries.  

Many advisors working with elders do not ask or adequately consider the impact on plans, programs, and lifestyles for elders retiring or spending retirement time in the USA Elders, and the advisors working with them, owe it to themselves to be cognizant of the ramifications of being deemed a US resident. They should also be aware of the similarities and differences in the issues, options, and benefits discussed in previous chapters affecting Elders.  

Though Canadians may spend a lot of retirement time in other countries, this chapter will focus on some of the major topics as they relate to time spent in the US. 

Chapter 6 – Income Tax Planning

The objective for the EPC in personal income tax planning is to minimize or defer income tas payable for the elder. This requires a general understanding of Canada’s Income Tax Act, and rulings put forth by the Canada Revenue Agency (CRA), along with other events, such as tax rulings in the courts. 

The EPC will be in a position to recommend various tax saving strategies that will keep the elder’s goals front and centre, thereby maximizing any spendable income. 

Again for this chapter, caution should be ercised. If you are not in a profession that will allow you to provide complete and accurate tax information, please let the experts handle it.

Upon completion of this segment, the EPC will be able to understand which income sources constitute earned income, and which ones do not. You will study tax deductions and tax credits, and how they will affect your clients’ and prospects’ net income.

This chapter will look at how indexing can affect an individual’s tax situation. You will be able to tell the difference between being an employee of a company, and being self-employed.

The complex taxation of Life Insurance will be studied in a way that makes it simple to understand. 

You will have a working knowledge of Capital Gains, Capital Losses, Deductions, Credits and other various different terminologies pertaining to taxation.

Click here to go back