feature Portfolio treatments Add a little certainty to your retirement income plan T Mike Magreehan is an investment advisor and Certified Financial Plan-ner with Canaccord Wealth Man-agement in Waterloo, Ontario. Mike welcomes your comments and questions at 1-800-495-8071 or [email protected]. Visit www.LMwealth.com. he ongoing volatile seesaw market of the past few years has made it difficult for inves-tors to navigate and effectively plan for their retirement. The market outlook remains unknown, with challenges relating to the ongoing European debt saga, persistently low interest rates, higher inflation and anemic real economic growth. Further, the impending wave of baby boomers may pose a significant challenge to the sustainability of government-sponsored entitlement pensions. At best, the outlook remains questionable. As a busy entrepreneur, running a successful incorporated practice, you have a unique op-portunity to add an element of certainty to your overall financial picture. While the future is inherently unpredictable, this article explores a strategy that can add a great deal of comfort and security to a well-rounded financial plan. Meet Dr. Adam Just. He is the owner of Dr. A. Just Chiropractic and Wellness Clinic. Adam is married with two children. He has endured the market volatility and is keen to add an element of security to his retirement plan. Like most business owners, Adam has worked hard and saved for retirement. His income consists of salary and an occasional dividend payable from the earnings inside his corporation. After paying his ongoing business expenses, Adam has excess cash that continues to accumulate inside the corporation, upon which he must declare and pay tax annually on the income earned. Adam has been diligent in his retirement planning. He has maximized his RRSP con-tributions over the years, as well as his tax-free savings account (TFSA). He also has a joint investment account with his wife. Overall, Adam’s portfolio consists of a good mix of high-quality stocks, bonds and mutual funds. Along with Canada Pension Plan (CPP) and Old Age Security (OAS), these savings will become his primary income source in retirement, which in Adam’s mind, is still several years away. As the clinic has expanded over the years with new patients, new staff and services being offered, the accumulated cash balance inside his corporation has managed to grow to a tidy sum. After paying himself and regular business expenses, Adam expects his cash reserves to continue accumulating for the foreseeable future. What planning opportunities does Dr. Just have for his corporation’s accumulated cash? The Corporate Insured Retirement Program (IRP) is an innovative business planning concept that provides life insurance protection plus the potential for future access to cash values that have accumulated and compounded in the policy on a tax-free basis. Adam recognizes that one of the few remaining tax shelters available in Canada is through purchasing life insurance. Although he may not yet be convinced of the benefits of owning more life insurance, Adam’s financial advisor explains the IRP concept from a tax-effective estate and supplemental retirement income standpoint. www.canadianchiropractor.ca Mike Magreehan, CFP 38 • CANADIAN CHIROPRACTOR | JUNE 2012
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