Helping You Avoid Costly Financial Mistakes
Some financial mistakes are obvious. Others don’t look like mistakes at all — until years later. Some examples include:
· Taking a little too much from a retirement account
· Making a large withdrawal without considering the tax impact
· Forgetting to update a beneficiary after a life change
· Assuming your Will takes care of your estate wishes
These decisions can have lasting consequences, which is why an important part of financial advice is looking ahead and identifying potential problems before they become expensive ones.
1. Taking Too Much Income in Retirement
Once you retire, the focus shifts from building your savings to determining how to use them.
Taking more from your investments than your plan can comfortably support — particularly in the early years of retirement — can affect how long your savings last. At the same time, being overly cautious can mean unnecessarily limiting the lifestyle you worked hard to build.
The takeaway: Your retirement income should be based on more than a rule of thumb. We can help determine how much you can comfortably spend while considering your investments, pensions, CPP, OAS, taxes and long-term needs.
2. Paying Tax You May Have Been Able to Avoid
Where your money comes from can matter just as much as how much you need.
For example, a large RRSP or RRIF withdrawal could increase your taxable income, push more income into a higher tax bracket or potentially affect income-tested government benefits or OAS. In other situations, using a TFSA, non-registered account or spreading withdrawals over multiple tax years may produce a different result.
The takeaway: Before making a significant withdrawal or financial move, talk to us first. A little planning around where, when and how you access your money can make a meaningful difference.
3. Outdated or Incorrect Beneficiary Designations
Beneficiary designations are often completed when an account or insurance policy is opened — and then forgotten.
But families change. Marriages happen, relationships end, children and grandchildren are born, and beneficiaries pass away.
An outdated designation could mean your assets don't pass according to your current wishes. Beneficiary decisions can also have different tax and estate implications depending on the account and the person being named.
The takeaway: Review your beneficiaries regularly and whenever there is a major change in your family or estate plan. And don't make beneficiary changes in isolation — they should work together with your overall estate plan.
4. Assuming a Will Is the Entire Estate Plan
Having an up-to-date Will is important, but it’s only one part of estate planning.
Account ownership, beneficiary designations, Powers of Attorney, insurance and the tax consequences of your assets can all affect what happens when you die.
Even a well-written Will may not solve problems created elsewhere if the pieces of the plan don't work together.
The takeaway: Your Will, beneficiary designations, account ownership and financial plan should tell the same story. We can work alongside your lawyer and accountant to help ensure the financial pieces of your estate plan are coordinated.
Before You Make a Big Financial Decision, Talk to Us
Not every financial decision requires a complicated plan. But sometimes a quick conversation before taking action can uncover something you hadn't considered.
That's an important part of what we're here for.
We don't just look at the decision in front of you. We consider how it could affect your taxes, retirement income, investments, estate and long-term goals.
Sometimes the value of advice isn't only in the opportunities you find — it's in the costly mistakes you never have to make.
As always, we’re here to answer your questions, talk through any concerns and help you think through the bigger picture when you need it.
This document is provided for general informational purposes only and offers a high-level discussion of certain topics. It is not intended to constitute, and should not be relied upon as, legal, tax, estate planning, investment, or other professional advice. You should obtain independent professional advice tailored to your specific circumstances before making any decisions. iA Private Wealth Inc. and its advisors do not provide legal or tax advice.
This information has been prepared by Jessica Perry who is a Senior Wealth Advisor for iA Private Wealth Inc. Opinions expressed in this article/post are those of the Senior Wealth Advisor only and do not necessarily reflect those of iA Private Wealth Inc. iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Canadian Investment Regulatory Organization. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.
Products and services provided by third parties, including by way of referral, are fully independent of those provided by iA Private Wealth Inc. Products offered directly through iA Private Wealth Inc. are covered by the Canadian Investor Protection Fund, subject to exception. iA Private Wealth Inc. does not warrant the quality, reliability or accuracy of the products or services of third parties. Please speak to your advisor if you have any questions.
