(Note: The current maximum contribu-tion is $5,000 per year, to be indexed in $500 increments in the future; the next ex-pected increase is $5,500 in 2012.) Take a close look at the table on page 42. There is a key point to take away – start as soon as possible. Compounding wealth takes time to gather speed and momen-tum. The earlier you begin, the more pow-erful it becomes and the more impressive your tax-free returns will be. CHOOSE THE RIGHT INVESTMENT OPTIONS Since the introduction of TFSA s, we have met with many individuals who have opened accounts on their own and have TFSA money sitting in GIC s or savings ac-counts earning less than one per cent inter-est. Not being an expert in selecting their own investments, and as a result of not being sure what to do, they have left the money in a low-interest account earning virtually no rate of return. Unfortunately, this is a wasted opportunity. Without a re-spectable rate of growth your tax-free pen-sion opportunity will virtually go nowhere. Safe investment options exist that can generate excellent long-term returns, pro-vide lower volatility and offer creditor protection and estate planning benefits. It is a full-time job to manage a diversified investment portfolio. Traditional pension plans are trusted to professional money managers; yours should be too. The best way to ensure a proper mix of appropriate investments is to speak with a professional who understands your profession and your specific needs and desires. PENSION MAXIMIZATION Once you have figured out how to build a tax-free pension, your next concern should be to make sure your money lasts as long as you and your spouse do. When you are ready to retire and draw an income, tra-ditional wisdom suggests you not spend more than four per cent of your tax-free ac-count each year for fear of running out of money, a common concern for most retir-ees. You can do much better. To maximize tax-free cash flow in retirement, we suggest our clients acquire a guaranteed permanent life insurance policy equal to the expected future value of the TFSA. When they arrive in retirement, the ownership of a perma-nent life insurance policy gives our clients the “permission” to spend down their TF-SAs over time, both principal and interest, giving them a much higher income to en-joy while alive. Upon either spouse’s death, the TFSA account is replenished with the proceeds of the guaranteed life insurance policy, leaving the surviving spouse with the account completely replaced to spend all over again. The net effect on this strat-egy can be a 60 per cent increase in spend-able income while alive. SPEAK WITH A PROFESSIONAL TFSA s are a great option to build a tax-free pension. Conceptually, they are simple. You deposit money into an account and later withdraw it tax-free to use however you wish. The truth is, like many things in life, they are much more complex than they first appear. To maximize their ad-vantages, they should be investigated and implemented with professional as-sistance. Don’t delay; the compound in-terest curve won’t wait. • Dr Brian Kelly Leadership Dr Bruce Lipton Immunology Dr Valerie Pennacchio Philosophy Dr Sheridan Brady-Kay Thompson Technique Dr Heidi Taylor Research Dr Graham Dobson Technique Dr Marina Fox Paediatrics Dr John Bassano Diagnostic Imaging Send us your best prospective students… and we’ll graduate Science • Art • Philosophy • Professional Success Study in beautiful New Zealand chiropractic leaders Contact Dr Anatole Bogatski on: [email protected] or see us at: www.chiropractic.ac.nz 44 • CaNaDIaN CHIROPRaCTOR | DECEMBER 2010 www.canadianchiropractor.ca
Chiropractic + Naturopathic Doctor December 2010: Page 44
