Aside from the age old male/female trysts, the fact is that women live on average 7 years longer than men. And in-spite of the equalization of women in the work force (at least the aspiration of pay equity) men on average earn more than women. That gap has closed to be sure, but it is still not an equal work force when it comes to men versus women in the pay equity department. Taken together women need more money than men. In other words women will pay less into the Canada Pension Plan as a result of lesser earnings and women will have the need for an income longer than men – about 7 years longer.

I find that in the majority of cases men handle the financial affairs of the household. That is not right but it is not wrong either, notwithstanding single women. How married people divide the household chores can be as diverse as the relationship itself. The important factor in a relationship is that they agree, who does what and that they cooperate with the overall objective.

However, given the above statistics it is very important that regardless of which person in the relationship handles the finances, they agree that extra planning is required for the female spouse.

Canada Pension alleviates this situation somewhat as they allow (upon application) the women of the house to leave out the worst years of pensionable earnings while her children were under age 7. It is worthy of note, to repeat, that to receive this consideration it has to be applied for and the application process can potentially be onerous. Proof of children is required and as easy as that sounds (looking at your 2 year old today) it may not be that easy to produce a birth certificate when the time comes. CPP maximum payable in 2008 was $884.58. Not a lot to count on when you consider the cost of living in Alberta.

Women living well into their nineties and beyond will become more common in the future. Medical technology is keeping us all alive longer, and chances are women will benefit over men in keeping with the statistic noted above.

So the bottom line is women will need more money and careful planning will be required to account for their extra time on the green side of the dirt. And men here is a happy thought – in order to try and keep up with your spouse

Get your prostate checked regularly!

Red Adair had a favourite quote: If you think hiring a Professional is expensive ‐ wait until you hire an amateur. James Kew is a Financial Planning Professional in Sherwood Park at 1-800-810-7526. All Financial Planning advice should only be undertaken after consultation with a Financial Planner who is a member of Advocis or the Canadian Association of Financial Planners.

1. Planning procrastination If you are 25 to 35 years old you have time on your side to allow your money to grow. At 50 + you lose that time. Don’t waste any more time waiting – call your financial planner today!

2. Lost buying power Make certain that you calculate inflation into retirement or savings plans. If you don’t factor inflation into your objective you will be short on funds for retirement.

3. Indifference to the need for life, critical illness or disability insurance This counts in retirement as much and perhaps more as it does during your work lifetime. If someone counts on your income for support you need life insurance. If you become disabled and cannot work – who is going to pay your bills. If you contract a serious illness – how are you going to pay the extra medical expenses. Some of these are examples of the real life need for insurance. Like as not big brother cannot take care of you or your family as well as you. Critical illness insurance is win-win when return of premium is included.

4. Too much debt This is a real twist on the day’s news events surrounding the “credit crisis“, however it is never more true than today. The more interest you pay on debt the less income you have for other things. If you have to borrow try hard to make the interest tax deductible.

5. No RRSP or TFSA Notwithstanding the investment medium there is no better way to save than first – getting a tax refund on your contribution and second – having the value of the RRSP increase on tax deferred basis. Maximize your RRSP contributions. Utilize the tax free status of the TFSA to maximize savings.

6. Not reviewing your investments Have you discussed your investments lately, with your financial planner. Insist on an annual review of your investments and know where you are headed – after all it is your money.

7. Storing your money in the bank Fixed interest accounts and bank accounts earn very little. Some segregated funds offer the upside of the market while protecting capital loss on the downside. Mutual funds do not offer any capital protection.

8. Trying to time the market Market trading is a full time job. People make money in the market everyday but they work hard at it. Leave the market trading to the professionals.

9. Switching funds to often Stay within a family of funds to reduce deferred sales charges. Look for investment trends – see number eight.

10. Overreacting to market gyrations Many people get frightened when the market drops and pull their money out (statistics support this fact). Buy low and sell high – see number eight.

Red Adair had a favourite quote: If you think hiring a Professional is expensive ‐ wait until you hire an amateur. James Kew is a Financial Planning Professional in Sherwood Park at 1 -800-810-7526. All Financial Planning advice should

only be undertaken after consultation with a Financial Planner who is a member of Advocis or the Canadian Association of Financial Planners.

Creditor insurance should be avoided if a personal insurance policy can be purchased in its place. Post underwriting means that when a claim is made, an insurance company then begins the process of finding out whether the insured qualifies for the insurance. This type of policy should be abolished. The underwriting process should always be completed at the outset of the persons need for insurance, not when a claim is made. Most if not all creditor insurance is post underwritten. This includes the mortgage life insurance and critical illness insurance that you may have purchased when acquiring your mortgage.

Actual case: A man and wife owned their home for many years. When obtaining their mortgage they purchased mortgage life insurance. At some point Mrs. X developed cancer. Later and not realizing how this would affect the purchase of a new home Mr. and Mrs. X acquired a new mortgage amount along with new premiums for the mortgage life insurance. Someone at the bank slipped up and did not actually re-do the mortgage insurance policy – they just increased the premiums and the amount of the life insurance to account for the increase in the mortgage amount. According to the bank these people were good bank customers with a long history. However, good bank customers do not necessarily equate to good insurance clients. Notwithstanding the question of intimidation, bank employees are looking out for the best interest of the bank – and rightly so, not the best interest of the customer. Applying for a loan is not the place to acquire insurance of any kind.

The cancer reared its ugly head and Mrs. X died. When Mr. X made a claim for the mortgage life insurance, the claim was denied – due to a pre-existing condition. We don’t have enough space here to deal with the rights and the wrongs of this situation, but suffice to say that if Mr. and Mrs. X had originally purchased a personal term life insurance policy with an appropriate amount sufficient to pay all debts, the husband would not have had his denied claim.

If you would like more information on creditor insurance contact me at jim.kew@kewcorp.ca. I will forward a short video free of charge on a creditor insurance study completed by CBC’s Market Place.

Red Adair had a favourite quote: If you think hiring a Professional is expensive – wait until you hire an amateur.

James Kew is a Financial Planning Professional in Sherwood Park at 1 -800-810-7526. All Financial Planning advice should only be undertaken after consultation with a Financial Planner who is a member of Advocis or the Canadian Association of Financial Planners.

My feeling is that the investment vehicle of choice should offer no cost (or very little) and your capital investment should not be at risk. At first glance this might limit choices but the tax free status of the earnings makes interest bearing investments more attractive than previous.

As an example mutual funds already enjoy a tax advantage over GIC’s. A mutual fund will produce a capital gain or loss – the gains taxed more advantageously than GIC’s. Dividend funds also enjoy tax advantages over GIC’s. A taxpayer in Alberta will currently pay 39% tax on GIC earnings (the maximum marginal rate in Alberta). Beginning in January 2009 that same taxpayer will not pay income tax on his or her TFSA earnings. In other words a 5% return on a GIC (or some other type of interest earnings) inside a TFSA will enjoy a real rate of return of 5%. Previously, the above taxpayer would have paid just a little less than 2% income tax for a net return of 3% (assumes a 5 year GIC rate of 5%).

Market investments such as mutual funds usually use an 8% net return for projections. Even with the capital gains tax status of these funds one should carefully compare the risk versus the reward of a GIC type investment (inside a TFSA) versus the riskier mutual fund type investment. Is the 5.5% annually compounded guaranteed net return on a 5 year GIC TFSA versus the 7.5% net return on a mutual Fund (average 8% per year for 5 years less tax at Alberta’s top rate) worth the risk? When GIC’s had no special tax status (i.e. TFSA) it seemed like an easy choice. To gain any chance for capital appreciation a mutual fund (in this interest return environment) was at the head of list. Now the choice is not so clear, especially in short term savings goals (up to 5 years). The TFSA (inside one of the current daily interest savings accounts available) is completely liquid and the earnings are non taxable. Cashing in a mutual fund (although usually liquid) is often subject to a deferred sales charge plus capital gains tax.

I have not yet reviewed any tax implications of a loss inside a TFSA. For instance a capital loss in a mutual fund can be used to offset any other capital gains. The tax free status of a TFSA will likely negate losses against gains making the choice of investment vehicle for your TFSA very important.

Red Adair had a favourite quote: If you think hiring a Professional is expensive ‐ wait until you hire an amateur.

James Kew is a Financial Planning Professional in Sherwood Park at 1‐800‐810‐7526. All Financial Planning advice should only be undertaken after consultation with a Financial Planner who is a member of Advocis or the Canadian Association of Financial Planners.

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