Retirement Ready 2018

2018

How to retire ■Tweaking your plan ■Layering your income When to retire ■Selling a business ■Seccession planning

Where to retire ■Rethinking Mexico ■Ageless residences Why to retire ■Snowbird advantage ■Fitness and fun

RETIREMENT READY

THE ULTIMATE RETIREMENT GUIDE MAGAZINE FOR BRITISH COLUMBIANS ■ Legal marijuana and seniors ■ Elder financial protection ■ Fixing your broken nest egg ■ Inclusive retirement residences

0_Retirement Ready 2018_03_40p.indd 1

2018-01-18 10:11 AM

ARE YOU READY FOR RETIREMENT?

CONTACT US FOR A COMPLIMENTARY PORTFOLIO ANALYSIS TODAY. PLAN.PROFIT.PROTECT.

LORI PINKOWSKI & SETH ALLEN

6HQLRU 9LFH 3UHVLGHQWV 6HQLRU 3RUWIROLR 0DQDJHUV 3ULYDWH &OLHQW *URXS

604.659.8047

SLQNRZVNLDOOHQ#UD\PRQGMDPHV FD SLQNRZVNLDOOHQ FD

Raymond James Ltd. is a member of Canadian Investor Protection Fund

0_Retirement Ready 2018_03_40p.indd 2

2018-01-18 10:11 AM

W E N

Retirement Health Plans with the for British Columbians.

Choice Only Pacific Blue Cross gives you the most options to personalize your health plan.

Coverage e Only Pacific Blue Cross offers you the highest level of coverage on prescription drugs.

Flexibilitty Only Pacific Blue Cross lets you adjust your health, dental and prescription coverage as your needs change.

Call 1 800 USE-BLUE | Talk to your advisor | Visit pacificbluecross.ca

BC's #1 Health Benefits P r ovider Most available coverage options from leading BC providers based on survey of conversion from group employee benefit to a retirement plan 3/28/17.

0_Retirement Ready 2018_03_40p.indd 3

0640.039 01/18 CUPE1816

2018-01-18 10:11 AM

contents FROM the editor’s desk

6

16

features Fixing a broken nest egg

16

Snowbirds face turbulence

24

A new age for retirement residences

26

Rethinking retirement in Mexico

30

Educating elders on financial abuse

33

Aging, medicine & marijuana

35

Time to get off the couch

37

2018

Fixing a broken nest egg

How to retire •Tweaking your plan •Layering your income When to retire

•Selling a business •Succession planning

Where to retire •Rethinking Mexico •Ageless residences Why to retire

•Snowbird advantage •Fitness and fun

retirement ready

The ulTimaTe reTiremenT guide magazine for BriTish ColumBians • Legal marijuana and seniors • Elder financial protection • Fixing your broken nest egg • Inclusive retirement residences

ColumnS

24

Publisher: Sue Belisle Editor-in-chief, business in Vancouver; Vice-president, Glacier Media:

Snowbirds face tRUMP TURBULENCE David—8

Kirk LaPointe Editor: Frank O’Brien

Pinkowski—9

Integrated Sales Managers:

Pia Huynh, Laura Torrance, Chris Wilson

Design: Randy Pearsall Production: Rob Benac Contributors: Patrick Blennerhassett,

Lee—10

Lucy Cohen, Cindy David, Bill Green, Pat Johnson, Arthur Klein, Baila Lazarus, David Lee, Peter Mitham, Frank O’Brien, Lori Pinkowski, Michael Timms, Mary‑Jane Wilson, Hayley Woodin Proofreader: Meg Yamamoto Advertising sales: Benita Bajwa, Dean Hargrave, Blair Johnston, Joan McGrogan, Corinne Tkachuk

Green—12

Sales Operations Manager:

Cohen—13

Timms—20

Educating elders on financial abuse

33

Wilson—14

Klein—22

LET’S LEAP off the couch

37

SINK

OR

SWIM

A R E YO U R E A DY F O R R E T I R E M E N T ?

0_Retirement Ready 2018_03_40p.indd 4

Michelle Myers

AdministratorS: Katherine Butler,

Marie Pearsall

Research: Anna Liczmanska,

Carrie Schmidt

Retirement Ready 2018 is published

by BIV Magazines, a division of BIV Media Group, 303 Fifth Avenue West, Vancouver, B.C. V5Y 1J6, 604‑688‑2398, fax 604‑688‑1963, www.biv.com.

Copyright 2018 Business in Vancouver Magazines. All rights reserved. No part of this book may be reproduced in any form or incorporated into any information retrieval system without permission of BIV Magazines. The publishers are not re‑ sponsible in whole or in part for any errors or omissions in this publication.

ISSN 1205-5662 Publications Mail Agreement No.: 40069240. Registration No.: 8876.

Return undeliverable Canadian addresses to Circulation Department: 303 Fifth Avenue West, Vancouver, B.C. V5Y 1J6 Email: subscribe@biv.com Cover: Signals Design

biv.com/navigating

2018-01-22 11:00 AM

ARE YOU HAPPY WITH YOUR RETURNS?

7.38%

*

TFSA RESP, RRSP & RRIF Eligible

$)%5 )7852

8.32%

**

9 Year Historical Annual Return

CAPITAL DIRECT I INCOME TRUST: < 29)67-2+ 2 %2%(-%2 )6-()27-%0 357+%+)6 < 357*30-3 #)-+,7)( 9)5%+) 3%2 73 "%08) 3* %6 3* )')1&)5

< )3+5%4,-'%00; -9)56-*-)( 5-1%5-0; #-7,-2 /1 3* %.35 !5&%2 5)%6 3* 5-7-6, 3081&-% 0&)57% 27%5-3 < 9%-0%&0) -675-&87-32 )-29)671)27 0%2 < -6735-' 3140)7) 357*30-3 9%-0%&0) 20-2)

%00 1-800-625-7747

*35 % *5)) '34; 3* 385 3**)5-2+ 1)135%2(81 35 64)%/ 73 ;385 *-2%2'-%0 %(9-635 35 135) -2*351%7-32 40)%6) 9-6-7 385 :)&6-7) %7 www.incometrustone.com

Capital Direct I Income Trust * Annual return is based on 2016 income produced by the Class A Units of the Trust after voluntary reduction by Management of Income Participation during Q4 2016. ** Nine - Year Historical Return as of December 31, 2016, is based on the income produced by the Class A Units of the Trust after any voluntary reduction in Management fees or Income Participation.

Past performance is not an indication of future returns. All subscriptions for the purchase of units are made pursuant to available exemptions. Investors should read the offering memorandum, especially the risk factors relating to the securities offered, before making an investment decision.

Capital Direct I Income Trust 305-555 W. 8th Avenue, Vancouver, BC, V5Z 1C6.

Capital Direct cd logo and trademark used under permission from Capital Direct Lending Corp.

0_Retirement Ready 2018_03_40p.indd 5

2018-01-18 10:11 AM

6 |

RETIREMENT READY 2018 PUBLISHED BY BUSINESS IN VANCOUVER

From the editor’s desk

MILLENNIALS, TIME IS ON YOUR SIDE

R

emember the mov ie Wall Street? How about the original Masters of the Universe?

Hit songs Man in the Mirror by Michael Jackson and Bobby McFerrin’s Don’t Worry, Be Happy are likely just as familiar.

All of these came out 30 years ago.

Yes, it’s funny how time slips away.

And that is the message to millennnials about their retirement angst: time is on your side, so take advantage of it. Don’t blame your parents.

This Retirement Ready includes a millennial’s rant on retirement (page 13) by London, U.K., author and award-winning entrepreneur Lucy Cohen, who cautions that retirement for those born after 1978 will be nothing like it was for the baby boom generation.

Cohen, and many other millennials, fear retirement. They say the

boomer generation had it good over the past half-century and envy an apparent easy street to the golden years.

But, believe me, there are few baby boomers who don’t look back on their retirement plans and wish they had taken greater advantage of the one thing they can’t replace: time.

In her book The Millennial Renaissance, How to Thrive for the Rest of Your Life, Even Though Boomers Have Screwed It Up for Us, Cohen argues that young workers today will have to juggle two or even three jobs and work longer to save themselves from pension-age penury.

She blames the boomers.

“If we don’t own or achieve the traditional trappings of ‘adulthood,’ it’s because the baby boomers have ruined it for us,” she writes. “They own the affordable housing. They snagged all the decent pension plans and are staying in the job market

longer. They’re eating up [government] pension programs – and oh, yeah … they brought the economy to a crashing halt a few years back.”

But millennials have time, an investor’s most powerful tool for retirement planning.

Consider this: if 30-year-olds today – many of whom are making more money than their parents ever dreamed of – simply took advantage of compound interest, their retirement could be secured. If they put $50,000 into a growth fund and never touched it, at a seven per cent return they would have more than $800,000 at age 70, just through the compound interest. Also, even a modest Vancouver home has tripled in value in the past 20 years.

Millennials, don’t compound the mistakes of the past.

Be savvy with early retirement investments and you’ll find time is on your side. É

Frank O’Brien, editor, Retirement Ready

February 13, 2018 3:30pm – 6:00pm

Panellists:

Moderator:

Shane King National Leader, Succession Services, MNP LLP

Adrian Bois David Lee Financial Advisor, Director, Individual Plans, Pacific Blue Cross BlueShore Financial

Kirk LaPointe Editor-in-Chief, Business in Vancouver & VicePresident, Glacier Media

As you approach retirement or ponder how you’ll stop working, you have to ask yourself: Are you retirement ready?

It’s a particularly crucial question in British Columbia, where one-third of the population is nearing 50 and 17 per cent has already achieved senior status.

We are nearing an unprecedented shift that will shatter the economic and social foundations of our province. With the help of leading experts, the BIV Retirement Ready panel discussion will investigate how and when to retire and how to embrace what should be the triumphant years of a longer life.

WHERE: Shangri-La Hotel | 1128 West Georgia St., Vancouver | PRICE: Subscribers: $59 | Non-subscribers: $69 For more information visit biv.com/events/retirementready PRESENTED BY:

0_Retirement Ready 2018_03_40p.indd 6

SPONSORED BY:

2018-01-18 1:06 PM

Supporting your parents as they consider retirement living?

CHARTWELL CARLTON %" ( )

CHARTWELL LANGLEY GARDENS ( )

CHARTWELL CEDARBROOKE ## )

CHARTWELL BIRCHWOOD ' )

CHARTWELL RENAISSANCE ( )

CHARTWELL CHURCHILL HOUSE "$ %& " )

CHARTWELL HAMPTON HOUSE ' )

CHARTWELL WILLOW ! )

CHARTWELL CRESCENT GARDENS %"" ( )

CHARTWELL LYNNWOOD ' )

CHARTWELL CARRINGTON HOUSE ## )

CHARTWELL IMPERIAL PLACE %"" ( )

Let Chartwell help you start the conversation chartwell.com/ essential-conversations

0_Retirement Ready 2018_03_40p.indd 7

CHARTWELL.COM

2018-01-18 10:11 AM

8 |

RETIREMENT READY 2018 PUBLISHED BY BUSINESS IN VANCOUVER

How to retire

THIS WILL HURT: NEW TOSI RULES AND YOUR RETIREMENT CINDY DAVID |

O If you draw $150,000 per year from your corporation, and could split the income with your spouse, you would pay a combined total of $30,670 in taxes. Under the new regime, if the whole amount is attributable to a sole owner, then you would pay a total of $44,023 in taxes

0_Retirement Ready 2018_03_40p.indd 8

Starting January 1 you will not be able to split income with your spouse or adult children unless they are significantly involved in the business

n July 18, 2017, the Department of Finance released a 60-plus-page paper entitled Tax Planning Using Private Corporations. This is further to concerns

by Finance in the 2017 budget that high-income Canadians were using private corporations to obtain tax advantages that are not available to other Canadians.

This article will specifically address the tax on split income (TOSI) rules and how they will affect retirement income.

The premise of this article assumes that the details of the proposals related to income sprinkling by the Department of Finance released on December 13 are implemented.

What you can expect: Starting January 1, 2018, and all future taxation years, you will not be able to pay dividends to your adult children or spouse unless they are significantly involved in the business.

If you are found to be in breach of this rule, Canada Revenue Agency will apply the highest marginal tax rate on any payment made to your children or spouse, whether you deem it to be salary or a dividend.

An exception is made for spouses but not until they reach age 65. For clarity, they have indicated that a substantial labour contribution means generally an average of at least 20 hours per week during the year, or any of five previous years.

And then there is an ownership exclusion on top of all of this that excludes any adult (over age 25) who owns shares equal to 10 per cent or more; earns less than 90 per cent of income from providing services; is not a professional corporation, and does not have income derived directly or indirectly from another related business.

All of this comes down to three major issues: ■they want to limit your ability to

split income with non-active family members; ■they recognize a contribution to the business and will not punish you from a tax perspective for rewarding that contribution; and ■they recognize the importance of income splitting with your spouse in retirement, just like your local MP can with income from his or her defined benefit pension plan.

CHILDREN Q There is no more splitting income with children who don’t meet t he exclu sion definitions.

What have you lost? In the past, you could carve out close to $40,000 per year to your adult children with no or little tax. Now, if they don’t qualify, that same $40,000 will cost $19,080 in tax. For most clients, this ends or is tapered when children graduate, get jobs and become financially self-sustaining.

SPOUSE Q There is no more split-

ting income with spouse, until age 65.

This is going to hurt. If you draw $150,000 per year from your corporation, and could split the income with your spouse, you would pay a combined total of $30,670 in taxes, or 20.45 per cent average tax. Under the new regime, if the whole amount is attributable to a sole owner, then you would pay a total of $44,023 in taxes, or 29.35 per cent average tax.

The net effect is that if you have to pay more in tax on retirement income, it requires more savings to meet the same spending needs.

To the extent income splitting was with children to pay for post-secondary education, either a higher amount will need to be to be paid out of the corporation to fund the same expenses on an after-tax basis or the business owner will need to personally fund a greater portion

of those expenses with after-tax income. Either way, there will be less available for investment and retirement income.

A business owner may want to consider registered education savings plans, tax-free savings accounts and other income-splitting strategies, such as prescribed rate loans to avoid both the attribution and TOSI rules. This can reduce the after-tax costs of funding post-secondary education, and in turn preserve more capital for investment/ retirement purposes. However, these strategies will often require extracting money from the business, which carries an additional tax cost. Also, to make some of these strategies worthwhile you need to pay out larger amounts from the corporation (versus trickling out dividends).

To the extent that income splitting is with a spouse, the spouse will receive less on an after-tax basis.

This will reduce the amount available to the spouse for investment purposes and for retirement income. Alternatively the business owner will not pay out those dividends and the spouse’s investment capital will be reduced even more.

Business owners may find it more advantageous from a tax perspective to pay out reasonable salaries rather than dividends to themselves and family members involved in the business. T his will create registered retirement savings plan contribution room. É Vancouver-based certified financial planner Cindy David, CFP, CLU, FEA, TEP, is president of Cindy David Financial Group Ltd., which consults to Raymond James Ltd. and other firms.

2018-01-18 1:08 PM

| 9

How to retire

WHEN RETIREMENT IS UNEXPECTED You need to be prepared and plan for the unexpected so that your retirement – and your family – is not at risk

LORI PINKOWSKI |

T As a retiree, you don’t get a second chance to build up the portfolio, so you need to understand clearly what your financial advisory team will do to manage risk

0_Retirement Ready 2018_03_40p.indd 9

here a re ma ny major a nd unpredictable life changes that can force people to review or alter their retirement plans.

To protect your family’s well-being, you need to be prepared and plan for the unexpected so that your retirement plans are not at risk. These are just some of the situations to consider: ■Family first: Your family will likely be the most important source of change in your retirement plans.

Retirement plans often include financial support for children, parents or other family members but with the cost of living at all-time highs, finances can get stretched.

Find the balance between being generous to your family and your own retirement needs, and incorporate this in your financial plan.

■Market disruptions: It is important to have an additional cushion for market volatility or an unforeseen stock market decline that could weigh heavily on your retirement portfolio if you, or your portfolio manager, don’t have a disciplined risk management strategy in place.

I n th is low-i nterest-rate environment many retirees have been forced to incorporate more stocks into their portfolio than bonds in order to target higher returns.

Portfolio managers must ensure that there is a plan for those equities should markets decline.

We don’t believe in a buy-andhold strateg y (mean ing you do nothing and ride out market declines in times of uncertainty). It is a recipe for disaster, and a massive loss in your portfolio could significantly damage retirement plans.

As a retiree, you don’t get a second chance to build up the portfolio, so you need to understand clearly what your financial advisory team will do to manage risk. It’s vital to a happy retirement.

■Job loss: An unexpected job loss close to retirement or being forced into early retirement is is often out of our control. If it happens to you, any savings strategy will get disrupted and you may need to start withdrawals sooner than expected.

W hether you receive a severa nce pack age or a re receiv i ng short-term disability, it may not be enough to fund your retirement plan. There are ways to manage this risk through insurance or higher savings.

It is important to complete a financial plan at least five years before retirement and ensure it incorporates a review of these risks.

■Illness: A severe illness or injury leading to assisted living or home care can be one of the biggest lifechanging events. Health-care expenses can add up quickly. Health insurance or critical illness insurance can provide assistance and offer some flexibility during times of distress, while ensuring the protection of your retirement savings.

A good financial planner will help you review these risks and the insurance options available to you.

You should also consider having a power of attorney and representation agreement in place.

■Death of a spouse: The death of a loved one has significant emotional repercussions but the financial toll can be just as devastating. How will the surviving spouse support the family? Insurance can help manage this risk but a proper review is needed to see the potential effect. It’s important to review your wills, life insurance policies, projected estate taxes and asset ownership to minimize probate and be as organized as possible should tragedy strike.

Investments earmarked for the “golden years” shouldn’t have to cover the surviving spouse’s regular living expenses.

BE PROACTIVE Q Here are steps to ensure you are retirement-ready and prepared for the unexpected: ■Find a competent and knowledgeable financial adviser/portfolio manager who can help with financial planning. Make sure that his or her approach to risk management resonates with you.

■Create a financial plan. It’s important to map out your financial path. Incorporate conservative assumptions for both returns and inflation to help ensure real life doesn’t fall short of the plan.

■Monitor this plan regularly and update it if required.

■Ensu re that you r investment strategy incorporates disciplined risk management.

■Keep your will up to date.

■Determine whether you need insurance or have adequate insurance already in place.

■Make sure beneficiaries are listed on your registered accounts.

Having a plan for the unexpected before and during retirement will ensure your “golden years” are fulfilling and your loved ones are taken care of if any unexpected event occurs. É Lori Pinkowski is a senior portfolio manager and senior vice-president, Private Client Group, at Raymond James Ltd., a member of the Canadian Investor Protection Fund. This column is for informational purposes only and does not necessarily reflect the opinions of Raymond James. Pinkowski can answer any questions at 604-915-LORI or lori.pinkowski@raymondjames.ca. You can also listen to her every Wednesday morning on CKNW at 8:40 a.m.

2018-01-18 10:11 AM

10 |

RETIREMENT READY 2018 PUBLISHED BY BUSINESS IN VANCOUVER

How to retire

TAXING DECISION: COMPARING RRSP AND TFSA DAVID LEE |

It is the differences between them that have important implications to a retirement or your estate tax burden

T TFSAs are better for estate planning as you can name beneficiaries and pass on the funds tax-free and without probate costs.

Comparably, RRSPs can also avoid probate but they will eventually be taxed as income at death, resulting in unintended tax obligations that can be costly

0_Retirement Ready 2018_03_40p.indd 10

o reduce ta xes a nd bu i ld savings, should you choose a registered retirement savings plan (RRSP) or a tax-free savings account (TFSA)? The truth is they can work together to help you achieve your goals and maximize tax savings. But emphasizing one option over the other can make sense, depending on your current circumstances, future expectations and financial plan.

RRSPs and TFSAs have a common ability to shield your income from tax. Practically every investment that’s RRSP-eligible can be held in a TFSA, from mutual funds and stocks to term deposits and savings accounts. But it’s the differences between them that have important implications when you’re trying to reduce your tax burden.

HOW THEY DIFFER Q One of the key differences between RRSPs and TFSAs is how they treat contributions and withdrawals when it comes to taxes. TFSA contributions are not tax-deductible, while RRSP contributions can be deducted against earned income or carried forward to future higher earning years to reduce your taxes.

An additional advantage of RRSPs, if you are currently in a higher marginal tax bracket but expect to be in a lower bracket in retirement, is that you get a deduction at a higher tax rate when you contribute, and create a future income at a lower tax rate.

TFSAs provide more flexibility and no tax consequences on withdrawals now and in the future, unlike RRSP withdrawals, which are taxable. Furthermore, the government mandates that you withdraw funds from your RRSP after the age of 71 to supplement your retirement income. A lso, this may impact government benefits that are income tested, and individuals with large

RRSP portfolios may end up paying higher income taxes.

Both RRSPs and TFSAs allow you to carry forward unused contribution room indefinitely. But that’s where the similarities end. When you withdraw from a TFSA, that amount is automatically added to your contribution limit for the next year. This allows you to “re-contribute” funds again and again. An RRSP doesn’t have the same benefit.

When you withdraw funds, your contribution room is gone for good and you can’t simply “put back” the funds as you can with a TFSA, unless you’re doing so through an approved program like the Home Buyers’ Plan or Lifelong Learning Plan.

TFSAs are better for estate planning as you can name beneficiaries and pass on the funds tax-free and without probate costs, which are about 1.4 per cent in B.C. Comparably, RRSPs can also avoid probate but they will eventually be taxed as income at death, resulting in unintended tax obligations that can be costly.

MAXIMUM CONTRIBUTIONS Q In 2018, the TFSA an-

nual contribution limit is $5,500.

This means you can now have up to $57,500 of contributions in your plan in 2018. For a couple, that’s $115,000. With new contribution room added automatically each year by the government, the total amount you can work with tax-free will continue to grow.

How much you can put annually into an RRSP is dependent on how much you make. For 2018, the maximum RRSP contribution is 18 per cent of your 2017 earned income to a maximum of $26,230 (subject to certain adjustments).

That means if you’re a high or even a moderate income ea rner, the

greater contribution room available through an RRSP can help you build tax-sheltered savings faster than through a TFSA. TFSAs and RRSPs don’t have to be an “either-or” decision. Think of them as complementary rather than competing. The TFSA’s flexibility makes it ideal when saving for short-term goals like a vacation or home renovation. For retirement savings, RRSPs might take priority.

If you’re already maximizing your RRSP contributions or have limited contribution room (because of a company pension plan, for example), a TFSA can boost your tax savings.

ACCESSING FUNDS Q If you want

easy access to your sheltered funds, the TFSA is the way to go. You won’t pay tax on every withdrawal like you will with an RRSP. And, you can re-contribute the funds in future years so they’ll be there when you need them.

Finally, start as early as you can to maximize your savings, and be committed to the plan as it makes a huge difference in the long run.

An annual contribution of $5,500 to either a TFSA or an RRSP with a five per cent return will result in $275,624 in 25 years. Having the flexibility to choose which option is to your best advantage will save you more taxes now and in the future. É David Lee is a financial adviser at BlueShore Financial and has over 15 years of experience in financial services.

He is a certified financial planner (CFP), a recognized financial management adviser (FMA) and holds the elder planning counsellor (EPC) designation. To learn more, visit blueshorefinancial.com.

2018-01-18 1:09 PM

Business advice you can retire on.

Running a business can be a challenge. With so much to manage day-to-day, you can lose sight of tomorrow, and your retirement plan.

The expert advice from a BlueShore Financial advisor will help build a plan that ensures you retire ready.

ŠBlueShore Financial Credit Union

0_Retirement Ready 2018_03_40p.indd 11

2018-01-18 10:11 AM

12 |

RETIREMENT READY 2018 PUBLISHED BY BUSINESS IN VANCOUVER

How to retire

LAYERING RETIREMENT INCOME

BILL GREEN |

RRSPs aren’t the only financial vehicle that helps you manage your taxes over time

H Having multiple retirement account types to draw income from allows you to tax plan annually.

By layering different types of income, you can reduce your overall taxation in retirement

aving multiple retirement income sources is a great idea. And that diversity, with proper planning, can reduce the income tax you pay.

Most of us understand the basic reti rement sav i ngs methods: a registered retirement savings plan (RRSP) or a spousal RRSP. We save a little bit of money when we can and reduce the income taxes we pay in the year we claim the RRSP deduction.

Then when we retire – and plan on being in a lower tax bracket – we take the money out in small amounts each year.

However, there can be a couple of issues with that type of thinking.

And RRSPs and spousal RRSPs are just part of retirement planning.

What happens if you’re not in a lower income tax bracket when you retire? What if your income tax rates rise? Will you pay more tax in retirement than you saved while making your RRSP contributions?

In some cases, this is highly likely.

But t h at doesn’t necessa r i ly mean you should forgo your RRSP contributions.

There are three tax-saving parts to an RRSP: T he first is the tax deduction you get when you make the contribution, reducing the cost of your savings and providing some instant gratification.

The second is the tax-deferred growth you get annually as the money compounds tax-deferred inside your RRSP. The third is the ability to control your withdrawals; although

this is constricted somewhat once you convert to a retirement income fund (RIF) through minimum withdrawal limits that increase as we age.

Minimum RIF withdrawals aren’t necessarily a bad thing. But taking the annual minimum could increase the total income tax you pay in your lifetime. As well, doing so could increase the “success tax” that your estate might eventually have to pay.

The ability to control your excess withdrawals allows you to tax plan, based on other sources of income you have each year. For example, in a year in which you do some taxloss selling from a non-registered account, you could increase your RRSP/RIF withdrawal.

So when you are planning for tax-effective retirement income, look beyond just RRSPs. A t a x-f re e s a v i n g s a c c o u n t (TFSA) can be a great tool. While many investors use their T FSA accounts as short-term savings, they can also be used for longterm sav i ngs. I n add ition, the fund compounds over time, so the withdrawals can really enhance your retirement income without being taxable.

If you use TFSAs to fund a longterm goal like retirement, make sure you focus on long-term investments. Nothing says you have to limit your fund to short-term interest-bearing investments. A TFSA can hold long-term investments such as stocks, bonds, exchange-traded funds and mutual funds. Your investments should

reflect your goals for the money inside the TFSA. Remember too that you can take money out of your RRSP or RIF and put it into your TFSA if your income will be lower in the current year than it was in the preceding year.

You can also have a non-registered taxable long-term savings account. Investments inside this account should focus on assets that provide long-term tax-advantaged capital gains and dividends. This will reduce your annual tax bill and allow for some tax-free or tax-advantaged income in retirement.

Having multiple retirement account types to draw income from allows you to tax plan annually. By layering different types of income, you can reduce your overall taxation in retirement. É Bill Green is a financial and estate planner, public speaker and author of The Success Tax Shuffle. Green has more than 26 years of experience in financial services. Visit billgreen.ca.

2017 Distributed by Troy Media

Business advice you can retire on.

Ask about our comprehensive lifespring® financial planning.

0_Retirement Ready 2018_03_40p.indd 12

2018-01-18 10:11 AM

| 13

How to retire

EVERYTHING YOU KNOW ABOUT RETIREMENT IS WRONG LUCY COHEN |

M We’re not a generation that wants the mundane or the mediocre when we’re older. We are adventurers and innovators.

The idea of sitting around in our slippers collecting the state pension seems shockingly dull

0_Retirement Ready 2018_03_40p.indd 13

illennials, nothing you’ve been taught about retirement pla n n i ng appl ies anymore. You’re going to have to forge your own path in a world with new financial and career expectations. Your parents might not like it. The media certainly won’t. But we’re millennials, and we walk our own path.

First things first – what is a millennial? And why do they need a retirement plan that differs from the standard retirement planning advice?

The term millennial is broadly used to describe the generation of people who were born between the early 1980s and late 1990s to early 2000s. In 2018, the oldest millennials are in their mid- to late thirties and the youngest are 18. But the world is a vastly different place than it was for previous generations. And the economic challenges we face are tougher and more uncertain than in any generation before.

T he m i l len n ia l generat ion is arguably the most socially minded and tolerant in history. We are the generation that ushered in samesex marriage laws, elected the first black U.S. president and created Facebook. And yet there is an underlying tone that we are lazy, entitled and narcissistic. Why is this so?

And more pertinent a question: if those things are even to a degree true, what has created this generation and what happens when they get old?

With the era of generous private and public pensions – and the certainty of your retirement age – a distant speck in the rear-view mirror, millennials need a new plan.

We have a problem, though. Retirement in the traditional sense of the word is no longer a sustainable economic or social state.

We have an aging population.

Millennial renaissance: how to thrive in retirement even though boomers have screwed it up for us There are more old people per young person who is working than there have ever been, and it’s a trend that is set to continue. In terms of government pensions, it’s the working generation that funds the retired generation. So what happens when the retired generation’s economic needs start to outstrip the resources provided by the working generation? We already see things happening: things like increases in retirement age and uncertainty about what we’ll actually get when we reach retirement age (assuming it hasn’t been increased to 90 by the time we get there).

One thing’s for sure– the old rules don’t apply to us; now or in the future. So what do we do about it?

Will most millennials ever be able to retire in the traditional sense of the word?

No. And, actually, that’s OK. We’re not a generation that wants the mundane or the mediocre when we’re older. We are adventurers and innovators. The idea of sitting around in our slippers collecting the state pension seems shockingly dull.

So instead of having a retirement, I’d suggest we all work towards having a renaissance. It’s a more feasible plan and, let’s face it, it sounds a lot cooler.

T he idea beh i nd a m i l len n ia l renaissance is formed around the acceptance that the old rules will never apply to us. Most will never have the traditional retirement wealth of boomers or previous generations. We have not been offered amazing pension schemes; we have not been able to accumulate property at a young age. And for those of us who have a property, we will not be able to pay off our mortgages before we retire. We can get angry at the situation, but that won’t change anything.

So instead, like true millennials, we’ll come up with a solution We have the tools to have fulfilling and rewarding lives outside of the traditional ideas of retirement planning, as long as you accept that you’ll always be “working” in some sense. My idea is to embrace having a combination of different incomes for the rest of your life. Don’t think about having one main income stream and putting all your eggs in that basket. Think about having a job, a side hustle, some residual (or passive) income and some savings.

Your future might look like a parttime job, part-time side business, revenue from podcasting, perhaps, and some savvy savings. Or maybe you run a business, earn some extra cash from personal training, get free meals out by having a successful food blog and own a rental property with your sibling.

See what I mean?

With this sort of mix and match of income streams, you’ll be able to have a fascinating life now and not miss out on anything, while also building yourself a sustainable later life – a renaissance.

So toss out the idea of a pipe and slippers. Embrace the fulfilment of an active and enthralling life, both now and into your later years. And don’t plan for retirement: live your renaissance. É Lucy Cohen, author of The Millennial Renaissance: How to Thrive for the Rest of Your Life, Even Though Boomers Have Screwed It Up for Us. A Retirement Plan for Millennials, is an award-winning entrepreneur, and a millennial, based in South Wales, United Kingdom. Cohen’s book is available on Amazon.

2018-01-18 1:11 PM

14 |

RETIREMENT READY 2018 PUBLISHED BY BUSINESS IN VANCOUVER

How to retire

A WILL GIVES A WAY MARY-JANE WILSON |

I If you die without a will [the government] basically writes a will for you and you have no say in who gets what or who administers your estate for you

What happens – mostly bad – to your estate if you leave intestate

f you die without a will holding assets in British Columbia, you die intestate, and your assets will be distributed according to the Wills, Estates and Succession Act (WESA). WESA basically writes a will for you and you have no say in who gets what or who administers your estate for you. Who receives what depends on who is in your family, and they are called intestate successors.

WESA sets out the scheme of distribution of your estate when there is no will as follows: If you have a spouse and no descendants your entire estate goes to your spouse. This is a married, common-law or same-sex spouse.

Descendant means all lineal descendants through all generations.

To simplify, we will use children interchangeably with descendants, but grandchildren and greatgrandchildren are also considered descendants.

If you have a spouse and children and your children are from the same relationship, your spouse will receive the first $300,000.

The balance of the money is divided equally among your spouse a nd you r ch i ld ren. T he i n itia l amount to the spouse is reduced to $150,000 if the children come from a different relationship. If one of your children predeceased you, their children will receive their parents’ share of your estate.

If your children are minors, then the Public Guardian and Trustee (PGT) holds their money until the children reach the age of 19, when it is paid to them. The PGT is the government body that takes care of people who cannot take care of themselves, which includes minors. There is no opportunity to set up a trust to postpone when they receive their inheritances, such as one-half at 21 and the balance at 25, or have the spouse or parent of the child be the trustee to administer the money as you would if you made a will.

Your spouse also has the right to purchase the spousal home to satisfy his or her interest in the estate for a period of 180 days after the date of the estate grant being issued.

If you have no surviving spouse, then your estate must be distributed to your descendants. Children receive their money at 19 years old.

If there are no surviving descendants or spouse, then your estate is distributed to family members in the following priority: ■your parents in equal shares or your surviving parent; ■descenda nts of you r pa rents ( brot hers, sisters, nephews, n ieces,g re at-nephews, g reatn ieces; g re at-g ra nd nephews/ nieces); ■grandparents or descendants of grandparents (uncles, aunts,

first cousins, first cousins once removed, first cousins twice removed, first cousins thrice removed); and ■great-grandparents or descendants of great-grandparents.

If there is no person who is entitled above, the whole estate passes to the government and is subject to the Escheat Act. If you make a will, you can appoint an executor to administer your estate. If there is no will, WESA sets out the priority among applicants who can administer your estate as follows: ■your spouse or someone nominated by your spouse; ■your child having the consent of the majority of your children; ■a person nominated by your child having the consent of the majority of your children; ■your child not having consent of the majority of your children; ■an intestate successor other than your spouse or your child, having consent of the intestate successors representing a majority in interest of the estate; ■an intestate successor other than your spouse or your child, not having consent of the intestate successors representing a majority in interest of the estate; and ■any other person the court considers appropriate, i nclud i ng, without limitation, and subject to the PGT’s consent, the PGT.

Don’t Die Without a Will. Retain a lawyer to make a will today.

Our legal services include: Q WƌŽďĂƚĞ͕ ƐƚĂƚĞ ĚŵŝŶŝƐƚƌĂƟŽŶ ĂŶĚ ŽŵŵŝƩĞĞ ĂƉƉůŝĐĂƟŽŶƐ Q WƌĞƉĂƌĂƟŽŶ ŽĨ tŝůůƐ͕ dƌƵƐƚƐ͕ WŽǁĞƌƐ ŽĨ ƩŽƌŶĞLJ ĂŶĚ ZĞƉƌĞƐĞŶƚĂƟŽŶ ĂŐƌĞĞŵĞŶƚƐ

Wilson Rasmussen LLP ŽŵŵŝƩĞĚ ƚŽ LJŽƵ͕ LJŽƵƌ ĨĂŵŝůLJ ĂŶĚ LJŽƵƌ ďƵƐŝŶĞƐƐ

TM

Mary-Jane Wilson

wilsonrasmussen.com | info@wilsonrasmussen.com | 604-583-7917 Guildford Landmark Building, Suite 300 15127 100th Ave. Surrey BC V3R 0N9

0_Retirement Ready 2018_03_40p.indd 14

2018-01-18 1:13 PM

| 15

By making a will, you choose who will administer your estate, not someone that WESA dictates.

W ESA dea ls on ly w ith assets solely in the name of the deceased.

Many assets, such as property held in joint tenancy and registered retirement savings plans (RRSPs), registered retirement income funds (RRIFs) and life insurance policies that are specifically designated to a beneficiary other than your estate, are distributed by operation of law and not by WESA. Many couples will hold all of their assets jointly such as real property and bank accounts. They will designate each other as beneficiaries on RRSPs, R R IFs and tax-free savings accounts so that on the death of one spouse, all assets are distributed to the surviving spouse, even if there are children.

There are tax consequences on the disposition of some of these assets, such as RRSPs and RRIFs. If you die without a will and you have not discussed these assets

a nd b enef ici a r y d e si g n at ion s with a legal professional such as a lawyer, there may be unintended c on s e q u enc e s on yo u r d e at h .

You may end up paying more tax than need be or pay probate fees unnecessarily.

Dying without a will does not necessarily mean that your estate immediately goes to the government, but it does mean that you do not choose your executor or beneficiaries. It can also mean delays, extra expenses and considerable inconvenience and even hardship for your survivors. The only way to choose your beneficiaries and who administers your estate after death is by making a will. É Mary-Jane Wilson is a partner of Wilson Rasmussen LLP, a Surrey, B.C., law firm, and author of the British Columbia Probate Kit. Visit wilsonrasmussen.com.

Home equity transferred

M

ore than a third of Metro Vancouver baby boomer homeowners plan to transfer proceeds of home equity to help relatives buy a home, according to a study by the Mustel Group with Sotheby’s International Realty Canada.

The 2017 Generational Trends Report: Canada’s Intergenerational Wealth Transfer & Next Generation Home Buyers is the first to analyze the transfer of “living inheritances” – gifts of funds while still living – to family members to buy a home.

Highlights of the study include: ■One-third of baby boomers across Canada’s four major metropolitan areas plan to give, or have already given, a living inheritance with the specific goal of helping relatives to buy residential real estate. A similar proportion plan on giving such a gift as

part of their will.

■Of living inheritance givers, 12 per cent have already transferred funds.

■36 per cent of Vancouver boomers have given or intend to give a living inheritance for family members’ residential real estate purchases.

■Eighty-seven per cent of urban boomers who have given a gift for a real estate purchase gave to their children. The median transfer for real estate purchases is in the $25,000- $49,999 range in Metro Vancouver.

■Ninety per cent of Metro Vancouver recipients say they plan to use the gift to help buy a first home.

Your legacy gift can help build a strong, healthy community for generations to come.

Please consider a gift to United Way of the Lower Mainland in your will.

Contact our Manager of Philanthropy: Michelle Bernard 604.294.8929 ext. 2442 michelleb@uwlm.ca or visit uwlm.ca/planned-giving Charitable Registration No. BN108160185 RR 0001

You’ve left your mark.

Now leave your legacy.

5640-0118

0_Retirement Ready 2018_03_40p.indd 15

2018-01-18 1:15 PM

16 |

RETIREMENT READY 2018 PUBLISHED BY BUSINESS IN VANCOUVER

How to retire

FIXING A

BROKEN NEST EGG Even those with a carefully laid retirement plan can have a black swan shatter their dreams

PAT JOHNSON

KEITH WOOD CERTIFIED FINANCIAL PLANNER, ENVISION FINANCIAL

If you’ve had a life-altering change, you really need to sit down and look at all the options. If you procrastinate, it just gets worse and worse

0_Retirement Ready 2018_03_40p.indd 16

F

inancial planners don’t like to talk about an unanticipated crisis or black-swan event. Ask them for advice on what to do if you suddenly lose your income, suffer a massive loss of assets or encounter some similar financial devastation and, to a person, they’ll tell you that if you had come to them in the first place, you wouldn’t be in this position now. That’s why they’re called planners and not, say, financial emergency responders.

But even people who plan ahead can stumble into economic calamities.

The 2008 recession saw many people’s retirement plans derailed or delayed. The leaky condo crisis of a decade ago drowned many people’s home equity. A health crisis might not bankrupt Canadians with hospital bills as it does many Americans, but its accompanying loss of income can take a chunk out of savings. And one thing even the most diligent financial planner might be timid about asking clients is whether they plan to divorce – an

increasingly common phenomenon late in life that can slash a household’s income in two.

These are not cheery topics. But the scenarios are possible. As much as financial planners strive to help us avoid such outcomes, when pressed, they will come up with some advice. Accept the disclaimer that everyone interviewed for this article declaimed the premise: with proper advice and planning, it should never come to this.

But, we persisted, what if it does?

How do you fix a broken nest egg?

2018-01-18 10:11 AM

| 17

EVANGELOS/ SHUTTERSTOCK

DON’T PANIC Q First of all, get an honest assessment, says Brent Davis, financial security adviser with Freedom 55 Financial. When the 2008 collapse happened, some people lost 40 per cent of their assets’ value. But those assets are only lost for good if you sell low.

“One of the things that a lot of people do is they panic,” Davis says. “It doesn’t matter that you’re down 40 per cent because, you know, more times than not, the market’s going to rebound. It’s just a matter of how long it’s going to take.”

Even if the rebound takes four years and not everything is fully recouped, the ultimate loss still might be much lower than the on-paper 40 per cent it appeared at the market’s ebb.

“The question you always have to ask yourself is, when do you need the money? If you need it tomorrow, you should never have been in a position to lose 40 per cent of it,” he says.

If a major loss of income or assets is unavoidable, though, there are some things that can be done. We just won’t want to hear them.

Lowering expectations is key.

Stav Adler is a portfolio manager and retirement analyst at PI Financial Corp., and a member of the Canadian Investor Protection Fund.

“Once adversity strikes, you can’t create value out of nothingness,” he says. “Once you’ve assessed where you stand today, planning for the future requires assessing three fundamental risks: investment risk, inflation risk and longevity risk. Investments could lose value, prices could go up and you could outlive your savings.”

It’s not something Adler recommends to people in good financial shape, but an annuity can be the answer for people who hit a financial crisis.

“What an annuity does is it buys an income stream,” he says. Usually purchased from an insurance company, the income can be monthly or quarterly, for the rest of the person’s life, adjusted for inflation. “So what that investor has done is exported that risk to the insurance company. They get steady income for the rest of their life.

The downside, of course, is you don’t have that money anymore. You could get hit by a bus the next day, they keep that money. It’s not yours anymore.”

Postponing retirement is another obvious, if unwelcome, possibility.

Someone’s plan for retiring at 60 may be suddenly unsustainable. “But if they work for another two years, they could put themselves in the green zone. By having that information, they can make a more informed decision.”

Stav Adler, portfolio manager and retirement analyst at PI Financial Corp.: an annuity can be the answer for people who hit a financial crisis | SUBMITTED

Succession planning isn’t just about what you’re leaving behind — it’s about what lies ahead.

exit smart

0_Retirement Ready 2018_03_40p.indd 17

2018-01-18 1:16 PM

18 | RETIREMENT READY 2018 PUBLISHED BY BUSINESS IN VANCOUVER

How to retire

TRIM EXPENSES Q Looking at your lifestyle is an

STAV ADLER PORTFOLIO MANAGER AND RETIREMENT ANALYST, PI FINANCIAL CORP.

Once adversity strikes, you can’t create value out of nothingness.

Once you’ve assessed where you stand today, planning for the future requires assessing three fundamental risks: investment risk, inflation risk and longevity risk. Investments could lose value, prices could go up and you could outlive your savings

SIX BIG, BAD BLACK-SWAN EVENTS A black-swan event is an unexpected, often unprecedented disrupter.

■ASIAN FINANCIAL CRISIS — July 1997: International stock values plunged 60 per cent.

unavoidable necessity.

“At a certain point, there is a basic minimum that everybody must have and then, beyond that, there is what people want,” says Adler. Cutting out frills – and many people mistake frills for necessities – is another unwelcome necessity.

Downsizing – reducing accommodation expenses or gaining access to home equity – can be an important step.

Keith Wood, a certified financial planner with Envision Financial, a division of First West Credit Union, knows of a widow in her 50s who was left with no insurance and discovered her husband’s self-employment records in a mess, with Canada Revenue Agency on their tail and a mortgage to boot.

“Fortunately, she had assets in the house,” Wood says.

“For her, retirement’s all of a sudden changed.” She’s selling the house and reframing what the rest of her life will look like.

Wood warns everyone – people facing sudden crises and anyone making plans – not to overextend. If getting into a townhouse will leave little or no cushion for saving or a special assessment, consider a condo instead. When it comes to downsizing, he adds, that can involve geographical options. Some people are planning to relocate late in life to the Okanagan or Vancouver Island, where their Lower Mainland home equity will go further.

The most important thing in a time of change is to face up to what’s happening.

“If you’ve had a life-altering change, you really need to sit down and look at all the options,” Wood says. “If you procrastinate, it just gets worse and worse.” É

■DOT-COM CRASH — March 2000: Nasdaq lost 78 per cent of its value almost overnight.

■9/11 TERRORIST ATTACK — September 2001: NYSE lost $1.4 trillion within five days.

■GLOBAL FINANCIAL CRISIS — September 2008: $10 trillion loss in international equity markets; housing sales and prices tumbled.

■OIL PRICE CRASH — June 2014: 50 per cent free fall in oil prices crushed Canadian resource stocks and many companies.

■BLACK MONDAY — August 2015: China’s stock market dropped 30 per cent, triggering global financial panic.

0_Retirement Ready 2018_03_40p.indd 18

2018-01-18 1:18 PM

Are you a business owner?

The federal government has introduced changes that will affect how you save for retirement. Are you ready?

Good advice shouldn’t be hard to find, you just have to know where to look.

Cindy David Financial Group is a boutique estate planning firm serving Canadian families and businesses. We help you to build and protect wealth, retire on your own terms, and give back to your community in a meaningful way. We also specialize in business succession and continuation, helping owners transfer their business interests in a smooth and tax-efficient manner.

Our goal is to bring clarity to complex situations. Together, we will build a customized financial plan that will enable you to live your dreams with peace of mind.

Financial Group Ltd. Operating under Raymond James Financial Planning Ltd.

0_Retirement Ready 2018_03_40p.indd 19

Cindy David, CFP, CLU, FEA TEP President & Estate Planning Advisor Cindy David Financial Group Ltd.

cindydavid.ca ! 604.659.8020

2018-01-18 10:11 AM

20 | RETIREMENT READY 2018 published by Business in VAncouver

When to retire

SUCCESSION PLANNING Michael Timms | Is your company ready for the demographic tsunami?

T

“

he sky is falling!” You know the story – Chicken Little gets hit on the head by an acorn, he mistakenly believes that the sky is falling and runs around hysterically warning others of the impending disaster that never happens. Likewise, for the last decade or more you may have also read media reports warning of the imminent mass exodus of the baby boomers from the Canadian workforce. But disaster has not yet struck. The fact, however, is that disaster is looming – it has just been delayed.

The graph below shows the effect that the baby boomers have had on Canadian demographics. The average age of retirement back in 2002 was about 60 years old. Today, the picture is quite different as the retirement age is rising.

Although the great recession convinced many would-be retirees to put off retirement for another five or so years, it only delayed the inevitable. Most organizations today are already feeling like we’re back to pre-recession tightness in the labour market.

Like Chicken Little, some companies think there is nothing they can do about the tsunami of retiring baby boomers, and that the tsunami will affect all companies equally – but neither perspective is true.

Companies can insulate themselves from the effects of the retiring baby boomers by establishing a succession plan and actively developing

From the time you begin to implement a leadership and talent development program, it takes at least two years before you begin seeing any real benefits. It takes about three to four years to build a strong internal pipeline of leadership and top talent. There is no time to waste

AVERAGE AGE OF RETIREMENT Canada age distribution 65

Age

64 63 62 61 60 2007

2012

2017

2018

Source: Statistics Canada (2018 projected)

their future leaders. Those companies that have not developed a plan to deal with the increase in retirements will be fighting a war for talent for the next 15 years.

A minority of companies is preparing and implementing succession plans for the time when the recruiting well will run dry. The rest of the corporate world should take a few notes from the playbooks of these proactive firms.

The best five things you can do

1. Make leadership and talent development a top strategic priority.

The only organizations that can sustain succession planning are the ones that view it as one of their top strategic priorities. Until they do, personnel development will always be at the mercy of the urgent crises of the day, and simply won’t get done.

2. Start with simple competencies.

Before you can craft a plan to develop future leaders, everyone needs to be very clear on the answer to this question: “What does it take to be successful here?” The answer lies not in a complex competency model, but in a simple set of criteria that everyone understands and regularly refers to.

3. Stop the vicious cycle of recruiting. When companies continue to hire external people into leadership positions, they are sending a clear message to their ambitious junior staff that they must go somewhere else to advance their career – and they will. The next time these companies have a leadership vacancy, they won’t have anyone to promote, so they’ll be forced to recruit externally, and the cycle will continue.

4. Stop promoting based on technical ability. Promoting people to their level of incompetence destroys morale and exacerbates the brain drain. Bright young stars will not stick around long under a boss with a lack of leadership ability.

5. Pair younger stars with seasoned veterans. Begin now to identify employees with leadership potential and craft a formal development plan for them that includes learning specific competencies from the company’s best.

In the movie Spy Game, Robert Redford’s character asks his secretary, “When did Noah build the ark?”

He then answers his own question: “Before the rain.”

I often hear about company owners who, planning to retire in the next two years, are prompted to begin seriously thinking about succession planning. Bad news: from the time you begin to implement a leadership and talent development program, it takes at least two years before you begin seeing any real benefits. It takes about three to four years to build a strong internal pipeline of leadership and top talent. There is no time to waste.

The impending grey tsunami and owner retirements aren’t the only reasons companies should begin preparing now. Those are simply things we can forecast. Other harder-to-predict challenges include senior leaders whose health suddenly fails, or who unexpectedly leave for other reasons. The key is this: don’t wait for a talent crisis before making leadership and talent development a top strategic priority. ç Michael Timms is author of the book Succession Planning That Works, and is a management consultant and speaker specializing in leadership and talent development. He is also the founder and principal of Avail Leadership, www.availleadership.com. To discover what it takes to build a leadership and talent development program, take the free talent development assessment at survey.availleadership.com/zs/fJB0FH.

| 21

CARPing on pensions

Tech may extend life

T

he Canadian Association of Retired Persons (CARP) is calling on the federal government to strengthen pension protection when an employer fails.

Last October, Sears was allowed to walk away from pension obligations of $250 million while its executives were paid $9.2 million in bonuses, CARP notes.

“When companies declare bankruptcy, pensioners and their pensions are given the short stick,” says CARP vice-president Wanda Morris.

“The assets that are available go to secured creditors and executives often walk away with their wallets unscathed. This also happened with Nortel, Target Canada and Indalex Canada.

Laws need to change to better protect pensioners. Current laws jeopardize the financial

G

security of hundreds of thousands of Canadians.”

CARP is calling for the government to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act so pensioners rank ahead of secured creditors when it comes to repayment.

The 300,000-member organization also urges governments to make company-funded pension insurance mandatory for all provinces.

roundbreaking research out of Silicon Valley, California, suggests that high-tech applications, including cancer-killing nanobots, could extend human lifespans.

Silicon Valley firms are now spending millions of dollars on longevity research.

Here is what they have come up with so far.

■Reprogramming DNA. Google-backed Calico Labs has a mission to end all the aging diseases that usually kick in after retirement: Alzheimer’s, Parkinson’s, macular degeneration and the like. Part of the work involves cracking the genetic code of extremely long-lasting creatures.

■Life-extension medicine.

Senolytics is a class of drugs designed to sweep the body of senescent cells, cells that have ceased to divide and

are suspected to be a key ingredient in aging. Unity Biotechnology has taken the lead in developing senolytics, and has been backed by an Amazon venture-funding firm.

■Nanobots. This is Google-backed research to upgrade the human immune system with tiny blood-borne robots programmed to destroy cancer, retroviruses and all the other invaders that can mean an early death.

CHAMPIONS WANTED Leave a Legacy for BC Children and Families Leaving a gift in your will to Ronald McDonald House BC & Yukon will provide accommodation and WYTTSVX JSV ȶ ȉȉȉ JEQMPMIW [MXL WIVMSYWP] MPP GLMPHVIR IEGL ]IEV EX SYV VSSQ LSYWI

www.bhfoundation.ca

0_Retirement Ready 2018_03_40p.indd 21

Contact us for information: Ȱȉȏ ȮȴȰ ȶȟȍȮ plannedgiving@rmhbc.ca www.rmhbc.ca

2018-01-18 1:19 PM

22 |

RETIREMENT READY 2018 PUBLISHED BY BUSINESS IN VANCOUVER

When to retire

WHY THE SALE OF A BUSINESS FAILS Discovering no one wants to buy your business can be a soul-crushing experience and a financial catastrophe

ARTHUR KLEIN |

F Many owners, being resolutely proud of the businesses they have built, and influenced by other, similar company sales, place a value on their businesses that exceeds its true value

0_Retirement Ready 2018_03_40p.indd 22

or many business owners, the context of selling their business has many expectations – not the least of which is to sell for the right price and with the best terms. Often these wouldbe retirees discover that they have not fully prepared themselves for effective transition – often harbouring unrealistic expectations.

In the world of business brokerage and transactions the outcome can be a soul-crushing failure to sell.

Recent business transaction surveys by the International Business Brokers Association, in partnership with Pepperdine University, report that the No. 1 reason sellers went to market (for $500,000 to $50 million businesses) wasn’t retirement. More than 80 per cent of business owners cited having cash at closing as a primary goal, followed by taking care of employees and getting out of the business quickly, at 70 per cent and 58 per cent, respectively.

The surveys also indicate that the major barriers to a business sale were declining profits, falling revenues, poor financial and operational reporting and owner dependency.

Business owners often contemplate selling for months, if not years. They simply have not taken the clear and progressive measures to plan for an optimal sale.

So let’s look at the value-to-price dynamic.

While there is no such thing as a perfect business free from defects, there are a number of problems that can hinder a sale that could be remedied, if given enough time. And if there is one parameter that is the core of this paradox, it is that of a defensible and realistic opinion of business value.

Many business owners, being resolutely proud of the businesses they have built, and influenced by other, similar company sales, place a value on their businesses that exceeds its true value.

This leads to one of two scenarios:

■an adviser may recommend simply not taking the business to market because the owner’s expectation of business value is unwarranted; or ■the business will go to market, offers will be below the owner’s valuation expectations and the sale will fail.

The core value drivers that affect business value are historical profits (cash flow), income risk, business growth and terms of sale. Owners should strive to enhance operating margins, reduce client concentration, and balance financeable earnings and assets while maintaining growth.

At the end of the day, it all relates to managing against risk.

DEAL KILLERS Q Deal structure

and tax management must be addressed proactively and early in the process. One critical but not consistently understood element is that of the lifetime capital gains exemption (LCGE). If eligible, the business owner can take advantage of the $835,000 (2017 threshold) exemption when selling shares, which has three critical measures per Canada Revenue Agency rules of Canadian-controlled private corporations: ■the qualifying corporation shares have a minimum holding period of 24 months; ■throughout the holding period, 50 per cent of the fair value of its assets were used in an active business; and ■at time of disposition, 90 per cent of the fair value of its assets were used in an active business.

Aside from these rules (and at press time the anticipated federal government changes for 2018 were not fully known) many business owners have wrapped their personal holdings (non-business investment accounts, real property) or even hold excess cash in the corporation.

That, or they do not hold the shares of the operating corporation directly. In many cases that would put them offside to realizing one of the

primary benefits of a business sale: not qualifying for LCGE. Often the buyer and seller place all of the focus on the sale price, at the expense of the “net after-tax results and deal terms” of a business transaction.

From a practicality point, the key comes down to understanding the latent drivers of business value and how a buyer will seek to mitigate risk.

Of most current transactions, approximately 75 to 80 per cent of deal value will be cash at closing (which includes debt financing), with vendor financing contributing 15 to 20 per cent.

When it comes to terms, one must leave the ego at the door and be receptive to seeking competent transaction advisers to facilitate terms that are normal and customary to protect your interests, while still remaining reasonable to the other side.

It is not uncommon for business sellers to become so emotionally attached to the company that they look past glaring problems that a business intermediary, a lender or a prospective buyer will immediately recognize. But this critical juncture it is not the time to stop learning or planning in such a way to prepare for a successful business sale.

Merger and acquisition advisers and other professionals need to be honest and direct in educating a business seller on the challenges faced in such a potential sale, the range for a realistic transaction price, as well as creative terms and structuring options that might be utilized. É Arthur Klein is an M&A adviser with Vancouverbased Pacific M&A and Business Brokers Ltd. He can be reached at 778-329-9558, or through www.pmabb.com.

2018-01-18 2:59 PM

| 23

Ethical investing

A

few years ago, Wayne Wachell completely eradicated fossil fuel stocks from his investment portfolios.

But for Wachell, CEO of Vancouver’s Genus Capital Management, the move was far from radical. In fact, he saw it as a prudent shift away from an energy sector on its last legs. He insists it’s just a myth that good returns aren’t possible without shares in industries that produce large amounts of greenhouse gases or otherwise damage the planet.

Wachell isn’t alone in this thinking.

Today more than $10 billion in Canadian assets are under management as so-called impact investments – more than double the total from two years earlier, according to the Responsible Investment Association, a body representing Canadian investment professionals interested in

the environmental, social and governance (ESG) factors of finance.

When Holly Vipond began focusing on environmentally ethical mutual funds two years ago, it felt like a natural fit for her personal values.

“I grew up with all of the environmental issues and resource issues just as part of my life,” the Vancouver financial advisor says, “but also a lot of my clients ask about these things. I get clients asking me, ‘Where is my money going?’”

At first, Vipond had trouble finding funds that suited the needs of her environmentally minded clients, but as more and more people approach her colleagues to ask about divestment and ESG ratings, she’s become the resident expert. “Not a lot of advisers are doing it, but more clients are asking for it.”

And are those clients making money?

“Oh, definitely,” she says.

S&P ESG vs. S&P/TSX Annual Returns 25%

20%

15%

10%

5%

S&P ESG 5-year

S&P/TSX 3-year

1-year*

* NOVEMBER 2017; ESG:ENVIROMENTAL, SOCIAL & GOVERNANCE; SOURCE: STANDARD & POOR S&P DOW JONES INDICES 2017

Help a low-income single mom and her children tomorrow by making a legacy gift today.

Legacy giving is an opportunity to make a lasting difference in your lifetime and beyond.

We can help you determine the type of gift that will best suit your needs and goals.

A special appeal from a pioneer in medical research “It’s hard to believe I’ve been at St. Paul’s for 40 years. I’ve seen what a difference gifts can make to research, patient care, and training the next wave of medical talent.

My special request is to ask you to do what I have done—include a gift to St. Paul’s Foundation in your will.

Your legacy gift will help change and save lives.”

- Dr. James Hogg Co-founder and former director (1977-1999) of the Centre for Heart Lung Innovation at St. Paul’s

Please contact: JoAnne Fahr 604 895 5829 or jfahr@ywcavan.org

0_Retirement Ready 2018_03_40p.indd 23

Join Dr. James Hogg and plan your legacy gift today: helpstpauls.com/legacy

2018-01-18 10:12 AM

24 |

RETIREMENT READY 2018 PUBLISHED BY BUSINESS IN VANCOUVER

Where to retire

SNOWBIRDS FACE

TURBULENCE Retiring to the U.S. in the Trump era presents border challenges – and potential tax rewards

PETER MITHAM

A More than 500,000 Canadians own real estate in Florida and thousands more own homes in U.S. sun destinations such as Arizona, California and Hawaii | SHUTTERSTOCK

0_Retirement Ready 2018_03_40p.indd 24

temperate climate, universal health care and spectacular scenery make B.C. the destination of choice for retirees from across Canada.

But with the price of real estate, not to mention the cost of living, through the roof, the U.S. is a popular alternative for locals looking to downsize not only their homes but also their expenses. While many so-called snowbirds opt for winter retreats in Florida, Hawaii, Palm Springs or Phoenix, retirement options also exist just outside the city – and country – in Point Roberts, Blaine and Bellingham. So long as they’re resident in Canada for six months, they’ll keep access to health care. Vancouver

residents will also avoid the city’s new empty-home tax.

But they’ll also have to deal with Donald Trump, whose election as U.S. president in November 2016 immediately prompted some U.S. residents to look longingly towards Canada.

What right-minded Canuck would see Trump’s America as an alternative to the true north, strong and free?

Any of them, says Matt Altro, president and CEO of MCA Cross Border Advisors, the investment planning division in the Montreal office of law firm Altro LLP, of which he’s a partner.

While there’s been plenty of talk about the threat Trump poses to the cross-border movement of both people and products, precious little has changed. Controls on migration have tightened, in part the culmination of long-term discussions between border agencies in the two countries, but few other initiatives have come to pass. The one that’s closest to becoming a reality, an overhaul of U.S. tax policies, could actually benefit retirees.

“There’s a lot of things they’ve intended to do, but almost nothing has actually moved through Congress and become law. But one of them that has high hopes is the tax reform,” Altro says. “Canadian residents who simply vacation in the U.S. could be exposed to a U.S. estate tax, which is basically a tax at death.… It’s pretty significant and a concern for very high-net-worth Canadians.”

Canadians who own more than $60,000 in U.S. real estate, equities or other assets, and whose estate at death has a value of more than $5.49 million – a number that increases in step with inflation each year – will face a 40 per cent tax on the value of their U.S. holdings.

2018-01-18 1:20 PM

| 25

But in good news for U.S. property owners, Trump wants to eliminate the estate tax altogether.

“He is doubling the exemption and it would go immediately to $11 million per person, and then by 2024 it’s completely eliminated,” Altro says.

Snowbirds who have set up trusts or other structures to mitigate the effects of the estate tax will want to re-evaluate whether or not the structure is still necessary, Altro notes. By eliminating the tax, the new regime could make the U.S. a more hassle-free retirement alternative for wealthy Canadians.

Altro, however, cautions that tax reforms won’t eliminate all the hassles. There’s still the long and costly U.S. probate process, and the risk of incapacity before death.

While some trust structures help owners avoid the probate process, Altro underscores the need for the proper paperwork to ensure that family members and heirs can do what’s necessary in the event of a retiree’s incapacity or death.

“These other issues that have always been there are still important and mean that you should be looking at how to protect yourself,” Altro says.

Another hot-button issue for Trump, immigration, also demands attention from retirees. While the laws haven’t changed, enforcement has stepped up.

“They’re reducing the amount of illegal immigration through extra scrutiny in the process,” Altro says.

U.S. of f ici a l s who recent ly met w it h h i s f i r m

emphasized that Canadians shouldn’t take crossing the border for granted.

“Just because you come regularly, every time you enter, the border officer is supposed to look at it as a completely new entry,” he says. “They made a point to mention that Canadians should not feel they have an entitlement to enter the U.S.… It’s completely on the discretion of the officer.”

Altro encourages travellers to be ready for extra scrutiny by having what he calls a “border kit” handy – a package that includes documentation of their ties to Canada and intention to leave the U.S. “Within that border kit they should have their tax returns from Canada, utility bills, if they have a lease they should bring a lease. And also if they are flying, a return ticket is really good to have to show that you are planning to return,” he says. “If you’re scrutinized, these things help.”

Canada and U.S. border agencies now share information, and double-checking what border agents have on file is important (it’s available for review at https://i94. cbp.dhs.gov/I94/#/history-search). Travellers should inform the U.S. Department of Homeland Security of any inaccuracies, just as they would try mending a bad credit report.

“You can see what their system shows in terms of your entries and exists,” Altro says. “Sometimes they don’t have all their information right.” É

Matt Altro, president and CEO of MCA Cross Border Advisors: “there’s a lot of things [the Trump administration] intended to do, but almost nothing has actually moved through Congress” | SUBMITTED

A Gift to Last.

Everyone has their own reason for leaving a legacy to Peace Arch Hospital.

Whether it’s to ensure future generations have access to quality health care close to home or wanting to express gratitude for exceptional care, let your legacy be a gift of health for your family, and for every family in our community.

What’s your reason for giving?

A Gift in Your Will

Learn how you can leave a legacy to Peace Arch Hospital at pahfoundation.ca or call Jim Bindon at 604.542.3184.

will support life-saving care for our future patients.

PLEASE CONTACT:

Catherine Cornish Manager, Legacy and Community Giving Phone: (604) 520-4902 Email: catherine.cornish@fraserhealth.ca rchfoundation.com/legacy

om e ghbours have becthe Our frie nds and nei to ens ure y nt wa we and y mil our fa hea lth care”. contin ue to have great “It will ben efit us all Pea ce Arch Ho spittoal.hel p ”

0_Retirement Ready 2018_03_40p.indd 25

2018-01-18 10:12 AM

26 |

RETIREMENT READY 2018 PUBLISHED BY BUSINESS IN VANCOUVER

Where to retire

A NEW AGE FOR

RETIREMENT RESIDENCES

Vancouver multi-generational residences are the first in Canada to address the need to include family members in a senior’s new environment

BAILA LAZARUS

A

s our physical and mental capacities diminish with age, we typically look to home care or government senior residences.

But what happens in the case of a couple that have different needs? What happens when public wait-lists are too long? Or if someone is not old enough to qualify for government beds?

The challenges of aging care needs are more complex than many realize.

“The current residential health-care system is very rigid,” says Connie Jorsvik, independent patient advocate and owner of Patient Pathways. “Eligibility criteria for residential care is extremely high due to the critical lack of beds, and then the wait can put tremendous strain on families as they juggle the needs of aging parents with their careers and raising their own children.”

Independent or assisted living is often not an answer, says Jorsvik, as it can be exorbitantly expensive and care is often limited, forcing families to bring in outside caregivers at an additional, massive cost.

“Families often want to be involved in the care of their aging parents but the current scenario doesn’t allow that choice – it’s all or none,” she says. “An opportunity for families to stay together and also get the support they need would be a beneficial alternative to the current all-or-none scenario.”

The challenge has resulted in a new approach to MONKEY BUSINESS IMAGES/SHUTTERSTOCK

0_Retirement Ready 2018_03_40p.indd 26

2018-01-18 10:12 AM

| 27

senior living – where residents can buy or rent modern, well-appointed suites; where children can live with their parents; where services are opt-in on an as-needed basis; and where the minimum age is not 65.

An example of this flexible approach – and currently the only one of its kind in Canada – is Opal by Element.

Located on King Edward near Cambie, Opal requires that only one family member in a suite be 55 or older, thus allowing family members from different generations to live together.

Opal is expected to be completed by February 2019 and will have 44 residential condominium units, 56 rental units and 30 complex-care units.

“We take a unique philosophy working with municipalities in terms of their age covenant and bylaws to provide the support and the care that’s not age-restricted in the traditional sense,” says Candy Ho, vice-president, marketing and corporate relations, Element Lifestyle Retirement. “Families can live together or seniors can have direct interaction on a daily basis with much younger people and not be surrounded by suffering and degeneration.”

This solution satisfies those who don’t like the stigma of moving into a “seniors’ home” and are trying to stay at home even when their health deteriorates, says Ho. “These people stay at home and they wait too long until they need care and then scramble around trying to find the support and care because there’s just not enough of it out there.

“You can try to get care at home, but you’ll only get two hours a week through government services,” says Ho, speaking from the experience she had with her late father-in-law, who had Parkinson’s and Alzheimer’s.

“Then the whole family becomes caregivers,” says Ho, adding that sometimes it’s the children who have special needs. “Anybody can need care at any stage of life.”

As an example, she says, there are parents with autistic children who are looking into her facility.

Douglas Guest, 38, bought at Opal for himself and his

0_Retirement Ready 2018_03_40p.indd 27

mother, Michele, 72. His father had lived at home with dementia. His family took care of him and had the idea of building a laneway house to enable his children to be around his father, but they didn’t get the laneway house built in time.

His father died at home at 88.

Anticipating his mother’s needs and seeing the long wait-lists for government residences, he started to look for options.

“You could have assisted living, but if you needed extra care for something like dementia, there wasn’t any room for another caregiver; and other places were more like hospitals.”

Guest decided to buy into Opal as an option for himself and his wife when they get closer to retirement.

Until then, he believes his mother will move into one of the 1,100-square-foot suites he purchased, and his in-laws will move into the other.

Mike Chiu, a commercial mortgage broker specializing in seniors’ housing, sees projects like Opal offering solutions for many seniors’ housing challenges.

“Government has not been keeping up with demand for the 75-plus population so what we’re seeing is more private-sector involvement,” says Chiu, who is a commercial member of the BC Seniors Living Association and BC Care Providers Association.

“When a senior buys a unit rather than stay at home on a wait-list, they take themselves out of the public system. You’re one less person on a wait-list for funded long-term care.”

From a financial standpoint, lots of properties offer rentals, but being able to buy a condo means seniors don’t have to deplete their equity as they would in a high-end rental, explains Chiu.

“There’s also a wider array of new housing types entering the market, and that’s where Element and the Opal is unique,” says Chiu. “Rather than doing pure independing living and meals or pure care, they’re saying, ‘We can do it all.’” É

Candy Ho, vice-president, marketing and corporate relations, Element Lifestyle Retirement: “these people stay at home and they wait too long until they need care and then scramble around trying to find the support and care because there’s just not enough of it out there” | CHUNG CHOW Opal by Element allows family from different generations to engage with each other on a regular basis | SUBMITTED

Connie Jorsvik, independent patient advocate and owner of Patient Pathways: “an opportunity for families to stay together and also get the support they need would be a beneficial alternative to the current all-or-none scenario” | SUBMITTED

2018-01-18 1:22 PM

0_Retirement Ready 2018_03_40p.indd 28

2018-01-18 10:12 AM

0_Retirement Ready 2018_03_40p.indd 29

2018-01-18 10:12 AM

30 |

RETIREMENT READY 2018 PUBLISHED BY BUSINESS IN VANCOUVER

Where to retire

RETHINKING RETIREMENT

IN MEXICO

Canadians drawn by change that allows freehold ownership – even in beachfront retirement homes

FRANK O’BRIEN

R

on Rishagen was born in Trail 74 years ago, but he will be spending most of his retirement days near Puerto Escondido on the southwest coast of Mexico, one of many British Columbians who have discovered the luxury destination of Vivo Resorts.

“It’s a winner,” says Rishagen, a retired university professor who, after checking out numerous options, bought a condominium at Vivo Resorts last November.

Over the last decade, the number of Canadians living in Mexico soared from 6,000 to 75,000, according to the Canadian Embassy in Mexico City.

A key reason is the discovery that Mexico has eased its century-old regulation on foreigners owning real estate.

Vivo Resorts is being developed by Calgary-based Cary Mullen, best known as the World Cup champion and two-time Olympic downhill skier. The resort’s success hinges on three facts: the 76 acres of land is owned outright by Canadians; it fronts 21 kilometres of pristine oceanfront beach; and prices for the luxury condominiums and villas are bargain-basement when compared with B.C. waterfront.

In the retirement destination of Victoria, for example, a waterfront home price averages $793,000. At Vivo Resorts, ocean-facing condos start at less than $330,000.

0_Retirement Ready 2018_03_40p.indd 30

Canadian Olympic skier turned developer Cary Mullen at Vivo Resorts, Mexico: “a Canadian can now own Mexican property outright” | DHZ MEDIA

The resort’s homes can also be rented when not in use, with 70 per cent of net proceeds going to the owner.

Mullen discovered that some myths about Mexican land ownership were just that.

For instance, Mexico’s 100-year-old regulations covering foreign ownership within 50 kilometres of a coastline have been relaxed, though using a “fideicomiso” (bank trust) is still required. Even so, there’s a lot of old thought and misinformation around what can and can’t be done, he says.

“When I first started researching I believed the rumours rather than knowing the facts,” says Mullen.

“I spent thousands of dollars with lawyers in Mexico learning about the specific steps and process.”

Some of the rumours Mullen refers to were that developers had to have property held by a Mexican bank trust and that they had to have Mexican partners.

“I learned that you could also have the trust be through some international banks such as HSBC or Scotiabank,”

2018-01-18 1:23 PM

During retirement I mightâ&#x20AC;¦ Learn a new language.

See the Northern Lights.

Start a new business.

Run a marathon.

Live in the moment.

Downsize.

Winter down south.

Enjoy adventures with the grandkids.

Are you ready for 30 years of retirement?

Retirementâ&#x20AC;&#x2122;s changed. And because itâ&#x20AC;&#x2122;s lasting longer than ever before, itâ&#x20AC;&#x2122;s full of endless possibilities. Thatâ&#x20AC;&#x2122;s why we approach it differently.

8F XPSL XJUI ZPV UP k HVSF PVU UIF SFUJSFNFOU ZPV XBOU 5IFO XF MPPL BU FWFSZUIJOH JODMVEJOH what you have and what you owe, to get you there. And throughout your journey weâ&#x20AC;&#x2122;re there to help you adapt to whatever you might encounter along the way.

Nearing retirement?

® / â&#x201E;¢ Trademark(s) of Royal Bank of Canada. RBC and Royal Bank are registered trademarks of Royal Bank of Canada. Financial planning services Come inarefor a whole conversation. and investment advice provided

by Royalnew Mutual Funds Inc. (RMFI). RMFI, RBC Global Asset Management Inc., Royal Bank of Canada, Royal Trust $PSQPSBUJPO PG $BOBEB BOE 5IF 3PZBM 5SVTU $PNQBOZ BSF TFQBSBUF DPSQPSBUF FOUJUJFT XIJDI BSF BGk MJBUFE 3.'* JT MJDFOTFE BT B k OBODJBM TFSWJDFT k SN in the province of Quebec. © 2017 Royal Bank of Canada.

rbc.com/mynext30

® / â&#x201E;¢ Trademark(s) of Royal Bank of Canada. RBC and Royal Bank are registered trademarks of Royal Bank of Canada. Financial planning services and investment advice are provided by Royal Mutual Funds Inc. (RMFI). RMFI, RBC Global Asset Management Inc., Royal Bank of $BOBEB 3PZBM 5SVTU $PSQPSBUJPO PG $BOBEB BOE 5IF 3PZBM 5SVTU $PNQBOZ BSF TFQBSBUF DPSQPSBUF FOUJUJFT XIJDI BSF BGk MJBUFE 3.'* JT MJDFOTFE BT B k OBODJBM TFSWJDFT k SN JO UIF QSPWJODF PG 2VFCFD Ã&#x152; 3PZBM #BOL PG $BOBEB

0_Retirement Ready 2018_03_40p.indd 31

2018-01-18 10:12 AM

32 | RETIREMENT READY 2018 PUBLISHED BY BUSINESS IN VANCOUVER

Where to retire

Vivo Resorts near Puerto Escondido, Mexico: waterfront condos are about half the price as in Victoria and have become popular with B.C. retirees | VIVO RESORTS

0_Retirement Ready 2018_03_40p.indd 32

Mullen explains. “I learned the government had changed that rule [about partners] and a Mexican company can be owned 100 per cent by a foreigner.

“A Canadian can now own Mexican property outright,” he says.

The result has been a residential sales performance that would have most Canadian developers drooling.

Since Vivo Resorts opened five years ago near the surfing community of Puerto Escondido, it has built and sold out seven condominium towers with a total of 100 units, plus 10 private detached villas. An eighth condo tower is 75 per cent sold. A ninth tower, Marino Residences, pre-sold half its 28 condos in five weeks last year.

About 45 per cent of buyers are from either B.C. or Alberta.

Even though prices have increased at least 40 per cent since 2012, buyers can purchase a waterfront condominium at Vivo Resorts for an average of $469,000.

One-bedroom suites in the newest tower start at $327,400 – and this includes all furnishings, from the giant-screen TV to the dishes and cutlery and maid service. A new two-level penthouse with three bedrooms and more than 1,850 square feet is priced at less than $800,000.

A luxury community and fitness centre recently opened at Vivo Resorts as did marketing for its Botanica condominiums, set back from the beach, but with larger pools and the lowest prices in the resort.

Vivo Resorts was named Mexico’s luxury resort of the year in 2016 by U.K.-based Luxury Travel Guide. É

2018-01-18 1:25 PM

| 33

EDUCATING ELDERS ON

FINANCIAL ABUSE Elder abuse is prevalent in Canada, and financial abuse is its most common manifestation

HAYLEY WOODIN

I

t often begins with verbal or emotiona l abuse, and requests for money.

Historically, itâ&#x20AC;&#x2122;s an adult son or grandson, dependent on his parents or grandparents, who takes unfair advantage of v u l nerable fa m i ly members. Abuse can vary from theft to coercion, even to threats or acts of physica l v iolence unless the victims do as asked or told.

Unfortunately, elder abuse is not uncommon. In fact, 45 per cent of Canadian seniors experience some form of abuse from age 65 and on, according to the Department of Justice.

While the type of abuse varies, the most common form is financial and emotional, and one often accompanies the other.

0_Retirement Ready 2018_03_40p.indd 33

SHUTTERSTOCK

2018-01-18 10:12 AM

34 |

RETIREMENT READY 2018 PUBLISHED BY BUSINESS IN VANCOUVER

Educating elders on financial abuse

Laura Tamblyn Watts, senior fellow and staff lawyer at the Canadian Centre for Elder Law, warns that securities rules and regulations need to change to help vulnerable seniors in serious situations | SUBMITTED

GRACE BALBUTIN DIRECTOR, SENIORS ABUSE AND INFORMATION LINE

A lot of older people tend to not see it as abuse. They see it as a parental responsibility to give money to an adult child or a grandchild … but it’s hard to distinguish: am I really helping, or am I being taken advantage of?

0_Retirement Ready 2018_03_40p.indd 34

Perhaps most unsettling: 64 per cent of victims know their abusers.

“A lot of older people tend to not see it as abuse. They see it as a parental responsibility to give money to an adult child or a grandchild, maybe needing help, but it’s hard to distinguish: am I really helping, or am I being taken advantage of?” says Grace Balbutin, director of the Seniors Abuse and Information Line (SAIL) and program manager of community-based victim services at Seniors First BC, formerly the BC Centre for Elder Advocacy and Support.

Open 12 hours a day from 8 a.m. to 8 p.m., SAIL fields around 3,000 calls a year from seniors and loved ones with questions and concerns related to elder abuse.

This year, Balbutin thinks the number of calls will rise to 4,000, in part due to greater awareness about the service – a silver lining around an otherwise urgent and upsetting picture.

A new report published by Vancity credit union found that more than a third of seniors in Metro Vancouver and the Greater Victoria area who have experienced financial abuse don’t tell anyone. About a fifth of that cohort stated they didn’t know whom to tell.

Polling included in Suffering in Silence: The financial abuse of seniors in British Columbia, which questioned 400 adults aged 65 and over through online surveys, also found that more than 80 per cent of respondents couldn’t name a support service related to elder financial abuse. Additionally, the report concluded that the gap between unprompted reports of abuse and reports made after examples were presented – three per cent and 36 per cent, respectively – indicates seniors may not realize or understand when or how they are victims.

It’s a life-and-death issue, according to Laura Tamblyn Watts, senior fellow and staff lawyer at the Vancouver-based Canadian Centre for Elder Law (CCEL).

“If an older adult suffers a loss of $20,000 or more, their chances of dying in 18 months skyrockets. So literally, elder financial abuse or abuse that takes an amount of money like $20,000 or more, it becomes a matter of life and death. Because you don’t have the opportunity to make the money back,” says Tamblyn Watts.

“It often results in homelessness, inability to buy food, inability to take medication. The shock and toll of that kind of violation and abuse really can lead to very imminent death. It’s an enormously serious issue.”

CCEL and the Canadian Foundation for Advancement of Investor Rights (Fair Canada) recently published Report on Vulnerable Investors: Elder Abuse, Financial Exploitation, Undue Influence and Diminished Mental Capacity, which Tamblyn Watts co-authored. It depicts several case studies – the snake oil salesman, the send-money scammer, the new (and manipulative) best friend – but it’s the “unsuccessful son in the basement”

that often proves most common.

Tamblyn Watts points to how the next decade or so will see the greatest intergenerational transfer of wealth in history. It’s not always planned for, and with age comes greater vulnerability, particularly when challenges like diminished mental capacity are considered. Wealth in this case means assets: a home and land title, securities, savings. Such transfers, or the liquidation of assets, often involve professionals who have experience and, in theory, an opportunity to prevent trades, sales or transfers that seem unusual or unwise.

In theory.

“If there’s real concern about it, they’re still bound by the regulations to the trade,” explains Tamblyn Watts, outlining that financial services representatives are both bound by confidentially and bound to execute the wishes of their clients. Breaching privacy or not acting on behalf of a client can come with serious professional repercussions. At the same time, if representatives suspect diminished mental capacity and do nothing, they also face consequences.

“It doesn’t really give them any flexibility if they’re very concerned with mental capacity, undue influence or elder financial abuse.”

Education and training for financial services representatives is one of a number of recommendations made in the report. It also urges securities regulators to adopt a rule that would require firms to collect information for a trusted contact person for each client, to be contacted should a client present signs of diminished mental capacity.

For consumers, the Canadian Bankers Association recommends safeguarding bank and credit cards along with personal identification numbers. The association also cautions that joint accounts, unlike power of attorney, give full account access to a joint user, and that individuals should understand every document they intend to sign, advice that holds regardless of age.

Both Tamblyn Watts and Balbutin warn that, unfortunately, once the money is gone, it’s gone. And that often leaves vulnerable investors and seniors with few resources to pursue legal action.

Again, education and awareness are key, and to that end, Seniors First BC hosts workshops for seniors and family members on financial prudence and how to identify abuse.

While financial abuse is sadly prevalent among older Canadians, it’s true too that anyone, at any age, can become suddenly more vulnerable to predators, scammers and thieves.

“Anyone could have a terrible car accident. Anyone could have a traumatic brain injury at any age,” Tamblyn Watts says.

“This is the kind of thing that we need to take out of an ageist idea.” É

2018-01-18 1:26 PM

| 35

Why retire

AGING,

MEDICINE & MARIJUANA

Don Briere, 66, president of Weeds Glass and Gifts Ltd., Vancouver, estimates that close to 30 per cent of the people who come into his shop are 55 or over | CHUNG CHOW

Seniors are using pot to ease arthritic and other pain but many doctors remain skeptical

PATRICK BLENNERHASSETT

T

he list of ailments that can supposedly be treated by marijuana is endless: everything from carpal tunnel syndrome and insomnia to Crohn’s disease and arthritis, even cancer.

Dr. M-J Milloy, a scientist with the BC Centre on Substance Use, who is also an assistant professor in the division of AIDS, department of medicine, at the University of British Columbia, however, says the clinically proven list of treatments for medical marijuana is quite short. Health Canada has only green-lighted cannabis (or cannabinoids, which include THC) as an appetite stimulant for anorexia caused by chemotherapy; for muscle spasms associated with multiple sclerosis; and for anorexia caused by HIV-AIDS.

0_Retirement Ready 2018_03_40p.indd 35

Milloy – an infectious disease epidemiologist who has done research on the effects of cannabis for those living with HIV-AIDS or addiction – says he can’t see a lot of seniors falling into the designated Health Canada categories for approved treatment.

“The other end of this is what people are actually using cannabis for therapeutically,” he says. “These are conditions which don’t have the same kind of rigorous evidence or approvals granted, but we know a lot of people are doing

JEFF SIMPSON 83-YEAR-OLD MEDICAL MARIJUANA USER AND PHD STUDENT

I says, “It’s helping, it’s really, really helping.”

And my doctor says, “It’s just your imagination”

2018-01-18 1:28 PM

36 |

RETIREMENT READY 2018 PUBLISHED BY BUSINESS IN VANCOUVER

Why retire

it with varying levels of effectiveness.”

Milloy says relieving arthritis pain is probably the most common use for marijuana among seniors. Statistics Canada estimates approximately 4.8 million Canadians suffer from various forms of arthritis, most commonly seen in people 40 years or older. Milloy says marijuana appears to offer relief for many, and noted when it comes to arthritis, the medical community does not have a definitive “magic bullet treatment.”

“Certainly we’ve heard from a variety of different sources, including Health Canada, that there are a lot of seniors out there who are trying cannabis or are using cannabis for arthritis and other related conditions such as pain management and insomnia,” Milloy says.

Jeff Simpson, 83, started using marijuana in his late 50s when he was diagnosed with a form of rheumatoid arthritis in his spine. His story echoes one that is common within the medical community. Simpson originally went to his doctor asking for relief, and was prescribed medication that came with a host of side effects.

“The drugs that my doctor had always prescribed for me were really pretty awful,” says the Vancouver businessman and university student. “They gave me really terrible liver problems, stomach problems, intestinal problems. I just kept saying to my doctor that I didn’t like the stuff, it makes me feel awful. And so a friend of mine says I should try marijuana and see if it helps.”

Simpson went out on the street and bought some marijuana and found it quite useful for pain relief so he could go about his daily schedule. Since then, he says, marijuana has gotten much better and he’s now stopped using any pharmaceuticals to treat his arthritis. Simpson says that even after he went back to his doctor and said marijuana was helping him with pain symptoms, his doctor was skeptical and even dismissive.

“I says, ‘It’s helping, it’s really, really helping.’ And my

CLOCKWISE FROM TOP LEFT:

Health Canada has greenlighted cannabis only as an appetite stimulant for anorexia caused by chemotherapy; for muscle spasms associated with multiple sclerosis; and for anorexia caused by HIV-AIDS | SHUTTERSTOCK A cannabis retailer’s sign advertising the purported health benefits of marijuana | FRANK O’BRIEN Dr. M-J Milloy says relief from arthritic pain is probably the most common use for marijuana among seniors | CHUNG CHOW

The Only Retirement Health Plan with flexibility to cover your changing needs. s.

0_Retirement Ready 2018_03_40p.indd 36

doctor says, ‘It’s just your imagination.’”

Simpson — who owns his own business and is completing his PhD in astrobiology — says he smokes about a gram a day (approximately two or three joints). When he first started using regularly he would get hungry; however, the feelings have passed, he says.

In terms of advice for seniors who might be thinking of trying marijuana for medical purposes, both Simpson and Milloy say heading to your doctor is probably not the best first choice.

“I would say talk to a friend who uses it,” says Simpson.

“And the first time you try it, don’t try it alone; use it with someone you trust because there are cognitive issues for sure.”

Don Briere, 66, president of Weeds Glass and Gifts Ltd., which has 17 pot dispensary shops across Canada, according to its website, estimates that close to 30 per cent of the people who come into his shop are 55 or over. “[Seniors] have more aches and pains than young people,” he says, noting arthritis is a common ailment mentioned by seniors who come to his shops. “Also, people who are older and active or who play hockey or something along those lines, looking for pain management.”

Briere notes some seniors are more comfortable taking topical forms of marijuana, which means there is no effect on the brain. He adds that liquid forms of straight THC are also popular, which means marijuana can be consumed without being smoked.

Mario Canseco, vice-president of public affairs for survey firm Insights West, says seniors (55 and older) are on par with the provincial average regarding support for the legalization of recreational marijuana, which the federal government plans to introduce legislation on this July. É

A healthy retirement?

Call 1 800 USE-BLUE

2018-01-18 1:30 PM

| 37

Why retire

TIME TO

GET OFF THE COUCH Getting off the sofa to work out after being sedentary your whole life requires more will than skill

BAILA LAZARUS

B

arb Ashcroft considers herself to be the non-athletic kid who got picked last for every team. She was more of an idea person, a thinker, never drawn to sports. This continued in her career as an herbalist and kinesiologist, where she spent most of her time behind a microscope or in front of a computer.

“Behind an iridology camera was not a healthy place to be because you’re not moving at all.”

“I was so non-athletic, I would see someone running or biking and I would think, why would you put yourself through that?” says the 69-year-old, laughing.

These days, however, Ashcroft is laughing all the way

0_Retirement Ready 2018_03_40p.indd 37

to a fitness centre in Qualicum where she looks forward to joining a variety of exercise classes. The switch came after doing some self-reflection and realizing what’s important to her is not the exercise alone, but the feeling of community.

“You know exercise is paramount, but still, it was only

Fitness trainer Arrow Gonsalves teaches gentle exercise and qigong deep breathing | SUBMITTED A Zumba Gold class in Vancouver given by Peachtacular Home Health Care gets the “unathletic” moving | SUBMITTED

2018-01-18 10:12 AM

38 |

RETIREMENT READY 2018 PUBLISHED BY BUSINESS IN VANCOUVER

Why retire

Yoga teacher Avital Balkin (above and second from right in large photo) includes Pilates and TRX suspension training in her classes to allow participants a variety of workout options and levels from which to choose | SUBMITTED

0_Retirement Ready 2018_03_40p.indd 38

by shame that as a health consultant I was supposed to be walking the talk that I was doing any athletic or fitness-related activities,”says Ashcroft.

“I hired a personal coach to come to my house, but never followed up on their instructions. That’s why trying to get fit at home wasn’t working; because I needed community.”

Going to the gym hadn’t fulfilled her needs, she says.

“It was just grunt work. I would think, ‘Kill me now.’ You really need to find the key that will unlock that need.”

It’s been si x mont h s si nce A shcrof t m ade t he turnaround.

“I’m shocked how excited I am to get to my classes,” she says. “My shoes are packed, my water’s ready, and I think, ‘Who are you?’

“It’s just amazing to me that at 69, I’m just finding this out now. I go three to four times a week and I plan my day around the classes I want to participate in.”

Applying the right “carrot” is key to getting people to exercise, says Arrow Gonsalves, founder and lead trainer, Heart Drum Beat Brain & Body Training Academy in Courtenay. Her focus is on conditioning the entire system – physical, mental and spiritual – to improve internal energy through qigong breathing exercises, meditation and yoga.

The combination of movement and breathing gets blood circulating through the brain so it performs better. It results in better sleep, a better functioning mind, improvement of memory and even feeling more optimistic.

Gonsalves says this type of combination of modalities works well for those people who are generally not that physical.

“The classes are gentle on the joints,” says Gonsalves.

“Anyone can do the exercises and it’s a precursor for overall healthy lifestyle.” She adds that even younger athletes might find the class challenging but everyone

can do it.

A practitioner since 2002, Gonsalves runs in-person workshops but also streams classes online, enabling participants to join from the comfort of home. She says it’s rarely the inability to move that keeps people from being able to do exercise.

“It’s more the will to make a change than physical ability,” she says.

Another big draw to get the “unathletic” moving is to have a variety of options to choose from.

Yoga teacher Avital Balkin says those starting out should look for classes that cater to a variety of levels.

“They have to start from where they are and be very patient and keep at it,” says Balkin, who includes Pilates and TRX suspension training in her practice. “I’m always trying to give lots of options for those who just started so they don’t feel left behind. And moderate, gentle exercise is always good for anyone.”

Balkin suggests those new to exercise start with a gentle hatha yoga class, then move up to regular hatha and then flow yoga, and also to look for classes that focus on the baby boomer age group.

If none of the regular incentives grabs your interest, and you can’t be guilted into getting off the couch, music can always be an inspiration, says Peachy Magistrado, owner of Peachtacular Home Health Care. Magistrado is trained in teaching Zumba classes for seniors, and educates her home-care staff as well.

“Music therapy inspires them to move,” says Magistrado, whose employees bring the Zumba music with them when doing home visits. “They may not necessarily dance, but they’ll get upper body exercise. It’s a way to get them started. If there’s no music, they’re not inspired, but if they hear something different, they start moving.”

Magistrado suggests starting with just 15 minutes a day for those who have been inactive for a long time. É

2018-01-18 10:12 AM

Succession planning isn’t just about what you’re leaving behind — it’s about what lies ahead.

An ExitSMART™ succession plan can help you take care of your family, finances and stakeholders when you’re ready to move on from your business. MNP’s succession professionals work closely with you to create the peace of mind and financial security you need to enjoy the next phase of your life.

To ExitSMART™, contact: Shane King, CPA, CA National Leader Succession Services T: 604.536.7614 E: shane.king@mnp.ca

0_Retirement Ready 2018_03_40p.indd 39

Ron Batty, CPA, CA Business Advisor Private Enterprise Services T: 604.685.8408 E: ron.batty@mnp.ca

Wayne Lenihan CPA, CA Business Advisor Assurance Services T: 604.536.7614 E: wayne.lenihan@mnp.ca

2018-01-18 10:12 AM

I give to my community and with Vancouver Foundation, my giving lasts forever.

75 years ago, a single gift started Vancouver Foundation and that gift is still making a difference in the community today.

We can help you create a fund that gives forever.

Get started at vancouverfoundation.ca/create or call Kristin at 604.629.5186

6Q Ć&#x201A;PF [QWT NQECN EQOOWPKV[ HQWPFCVKQP XKUKV communityfoundations.ca

0_Retirement Ready 2018_03_40p.indd 40

2018-01-18 10:12 AM