Once in a while, life knocks us for a loop.

Sometimes it presents itself as the abrupt end to a 15-year marriage. Or maybe it’s a child who refuses to communicate with his parents. It can even be a poor business decision that results in bankruptcy.

Sadly, countless people endure these and other life-changing experiences. While each situation is unique, the initial response from most every one often is “I didn’t see it coming.”

Let’s be honest. There probably had been indications along the way. Signals that, had they been acknowledged, might have prevented the problem from escalating. But in some cases there are no warnings, particularly, when it involves one’s health. One day we’re running 10K, the next we’re on life support.

There’s no telling when life will throw a curve ball at us, or in the case of Sandra, hit us over the head with a sledge hammer.
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Effective January 1, 2010, you now have another $5000 contribution room for your TFSA.  This is in addition to any unused contribution room you may have left from the $5000 entitlement for 2009.

Also, if you withdrew money last year, you can now replace it without affecting this year’s limit.

As with RSPs, personal investments can be transferred into TFSAs to avoid tax on future income.  Don’t forget though, you might trigger tax on any capital gains earned to the date you transfer investments.

The last day for topping up your 2009 RSP contribution is coming up fast.   Amazingly, many of us do not contribute our maximum, even though it still remains one of best ways to both save for retirement and reduce taxes.

If you don’t have the cash:

• Ask us about RSP loans.  They are quick and easy, and with interest rates so low, its a great opportunity to get the tax deduction and meet your retirement goals.
• Consider making a ‘contribution in kind’.  You can transfer investments you own personally to your RSP, and get a receipt for the current market value.  But don’t forget that any capital gains to the date of transfer will be triggered.

With the Winter Olympics taking place during the last two weeks of February, don’t wait until the last minute!  Getting around town during that time will be a challenge for everyone.

Consider a regular monthly RSP contribution, instead of coming up with a large amount at once.  It’s often easier on the pocket, and it’s often a better way to invest (dollar cost averaging).

Don’t forget to use your tax refund wisely!  Repay loans or mortgages, or get a jump start on your 2010 RSP contribution to make a significant improvement to your financial needs.

ZLC clients and friends enjoyed our recent workshop where our guest speaker, Doug Towill, presented several interesting and provocative thoughts on what we can expect in retirement.  Doug shared ideas on how we can best prepare ourselves to maximize our opportunities, and enjoyment, of this important, and hopefully long stage of our lives.

Highlights from the presentation included discussion on:

• The risks we face with Longevity (will we outlive our money during our 25 to 30 years of retirement?) inflation (what will a dollar buy us in 20 or 30 years?) and Market Volatility (will a drop in the market set us back?)
• The Sandwich generation (most middle age people have more parents than children)
• Our increased awareness of the dangers of retirement and whether products exist to help protect/manage losses (tragically, far too many assets are now held in tax inefficient and low interest bearing investments)
• The concerns we face in maintaining our lifestyle in retirement (a large percentage of us are finding that our expenses are much higher than we expected)
• The events that trigger retirement readiness (financial freedom, a significant age, health, death of someone close, career setback)
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Mark Zlotnik wrote an article about strategies to guarantee your income for life. The article was recently published in the Business in Vancouver newspaper. Here is the text from that article:

A person stands tallest when they have financial stability. Having money set aside, a plan for the future and income to make dreams come true, are goals I’ve taught my kids to strive for. Achieving them prevents a slouch from creeping into our stance.

Right now however, securing this confidence is a tough task. The world wide financial crisis has left many of us crouching, hoping to avoid getting caught in the crossfire. But hiding behind a tree, or lying low, can’t go on forever. Sooner or later, if one wants to achieve that sought after stability, we have to stand up, pick a path and take it.
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Ever wonder why the income you receive from your RRIF can change, even when the amount you withdraw each year remains the same?

While there is no minimum age for a RRIF, you must convert your Registered Retirement Savings Plan (RRSP) to a RRIF by the end of the year in which you reach age 71. Once you convert your plan, Canada Revenue Agency then mandates a minimum annual payment that you must take from your plan each year.

That minimum payment is a percentage based on your age and the value of your investments on January 1 of each year.
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