Financire SISIP Financial Washington March 2019 Suzanne Smith

Financière SISIP Financial Washington – March 2019 Suzanne Smith, CFP

CF Morale & Welfare Services

Vision « Every member of the CAF community and their family has financial health and security! » Photo: WO Jean-François Néron, CD, MSc

SISIP Financial Insurance RSP vs TFSA Investments Financial Counselling Pensions

Life Insurance Replacement income, allowing beneficiaries to maintain lifestyle Eliminate/reduce debts Children’s education Final expenses Estate planning

Life Insurance How much do you need?

Life Insurance 5 Year Group Term Insurance: Optional Group Term Insurance (OGTI) Insurance for Released Members (IRM) Reserve Term Insurance Plan (RTIP) Permanent Life Insurance: Term 100

OGTI/IRM/RTIP No exclusions for war, dangerous occupations, hobbies, volunteer activities or sports Less stringent medical underwriting requirements Free Dependent Life coverage of $10, 000 Issued in increments of $10, 000 up to a max of $600, 000 Accidental Dismemberment benefits for injuries that are « non-attributable to military service »

Term 100 CAF members (serving and former), their spouses & adult children can apply Issued in increments of $25, 000 up to a max of $100, 000 Level premiums for life Level coverage for life Activities/Travel/Deployment will not be rated or declined if part of duties as an active CAF member

Term vs Permanent

Critical Illness Insurance CAF members (serving and former), their spouses & children can apply Up to $300, 000 for members and spouses and up to $10, 000 for children Critical Illness Insurance is a living benefit Pays a lump-sum benefit directly to insured upon diagnosis of a covered condition Payment is tax-free and can be used in any way the insured chooses

What am I Covered for? (Dependent Children) 6 CHILD-SPECIFIC CONDITIONS • Cerebral Palsy • Down’s Syndrome • Cystic Fibrosis • Congenital Heart Disease • Muscular Dystrophy • Type 1 Diabetes Plus all 25 illnesses and conditions covered for Adults All children covered for one low rate 13

SISIP Financial Insurance RSP vs TFSA Investments Financial Counselling Pensions

Financial Counselling Providing personal money management assistance and education Assist with access to Support Our Troops Fund loans and grants Referrals to professionals, local community service or other military resources Assistance in resolving financial difficulties and improving quality of life Strict case confidentiality

Returning to Canada Allowances have ceased but you still have a posting loan? Are you able to pay US debt you may have acquired? Leaving US rental unit – damage/security deposit? Utilities? If buying a house when back in Canada, are you eligible for HBP?

Financial Counselling Contact SISIP FC before Chain of Command is brought into the picture Repay foreign debt prior to departing OUTCAN Contact the local FC in your new posting area to determine cost of living Do not purchase a house in new posting area until you have determined the costs are within your budget

SISIP Financial Insurance RSP vs TFSA Investments Financial Counselling Pensions

Pension Possibilities Annuities • Immediate • Deferred (payable @ age 60) • Reduced (if taken between 50 -60) Transfer Value • Under age 50 * Contact GCPC to receive your estimate * Note: less than 2 yrs pensionable service = return of contributions + interest Source: National Defense & the Canadian Armed Forces

Immediate Pension (new rules) With at least 2 yrs of pensionable service: Age 60; or Age 55 with 30 yrs pensionable service; or With 25 yrs of CF service; or Medical release with at least 10 yrs of service Note: If you are entitled to an immediate annuity, you cannot opt for any other benefit You may be eligible to retire earlier with an immediate annuity if you are grandfathered Source: National Defense & the Canadian Armed Forces

Deferred Pension With at least 2 yrs of pensionable service: Not entitled to an immediate (unreduced) pension Medically released members with less than 10 yrs service Payable at age 60 Depending on age, may opt for reduced pension (age 50 -60) or Transfer Value (under age 50) Note: only available if you are not eligible for an Immediate Pension Source: National Defense & the Canadian Armed Forces

Reduced Pension With at least 2 yrs of pensionable service: Between the ages 50 and 60 and entitled to a deferred pension Payable the later of your 50 th birthday, date of release or date of option Reduction is permanent and applied to your deferred pension Note: only available if you are not eligible for an Immediate Pension Source: National Defense & the Canadian Armed Forces

Transfer Value Must be under age 50 AND not eligible to receive an immediate pension Lump sum payment equal to the value of your future pension Payable in 2 amounts: Inside & Outside Inside amount transferred to a Locked-In account, annuity or eligible pension The investment risk is your responsibility Every situation is unique & a SISIP FP can help you decide which option is right for you Source: National Defense & the Canadian Armed Forces

Transfer Value Registered pension plan or Locked-In RSP $118, 500 Individual RSP $46, 000 Cash (less taxes) $57, 000 Estimated Total TV $221, 500 * Hypothetical situation, for illustration purposes only Tax sheltered amount Non tax-sheltered amount (now taxable)

Survivor’s Pension More than 2 yrs service: 1% x year of service x your average earnings • Eligible child(ren) – 1/5 of Survivor’s amount up to 4 children; with 5+children 4/5 is divided equally • Eligible child(ren) & no Survivor – 2/5 each to max 8/5 • No survivor and/or children – greater of ROC + interest OR 5 x annual accumulated pension • Less than 2 yrs service, greater of: • Return of contributions + interest; OR • One month pay for every year of pensionable service • No survivor and/or children – ROC + interest Source: National Defense & the Canadian Armed Forces

Indexing Years of completed service 25 26 27 28 29 or less 30 or more Age when indexing will start 60 59 58 57 56 55 Total 85 85 85 * Indexing is immediate for medically released members, survivors and children Source: National Defense & the Canadian Armed Forces

Bridge Benefit Monthly benefit payable in addition to the lifetime pension Contribution rate and benefit amounts are coordinated with CPP Payable from the start of CAF annuity until member reaches age 65, dies or in receipt of CPP disability pension 2% x pensionable service x avg YMPE x 31. 25% * Survivor’s Pension & Children’s Pension are not affected by the Bridge Benefit Source: National Defense & the Canadian Armed Forces

CPP/QPP Based on contributions between 18 -70 (General drop-out provision and child rearing provision) YMPE in 2019 $57, 400 Maximum of $13, 855/yr* Average CPP payment is $7, 974/yr* Can apply anytime between age 60 & 70 Service Canada can provide your estimate * assuming payment begins at age 65; October 2018 Source: Service Canada

CPP Changes CPP will differ if taken before or after age 65 Age 60 Monthly % - 0. 6% 65 70 Source: Service Canada Maximum monthly payment $ 739 $ 1154 + 0. 7% $ 1639

Old Age Security (OAS) OAS provides a maximum annual benefit of $7, 217 for Canadians aged 65 and over in 2019 (Indexed quarterly) Based on age and residency (18 -65/40 years) Automated enrolment program effective July 2013 OAS is reduced once net income reaches $75, 910 and fully eliminated at $123, 386 (income year 2018) Source: Service Canada

Normal CPP Election (Age 65) Bridge Benefit CPP Lifetime Pension Income to Age 65 Income Age 65+ $ Total Income OAS

Early CPP Election (Age 60) CPP (reduced) Bridge Benefit Lifetime Pension Income to Age 60 Income Age 60 - 65 Income Age 65+ CPP (reduced) $ Total Income OAS

SISIP Financial Insurance RSP vs TFSA Investments Financial Counselling Pensions

Registered Accounts RRSP • • Tax deferred Must transfer to RRIF by Dec. 31 in year you turn 71 Spousal RSP (SRSP) • • Tax deduction to contributor Withdrawal taxed in spouse’s hands – 3 year attribution rule! TFSA • • • Contributions are not tax deductible (after-tax income) Growth is tax free Withdrawals not considered income & will not affect income tested benefits/credits Source: Canada Revenue Agency and lifeannuities. com

Your Investment Choices Investment options for (S)RSP, TFSA, RRIF, RESP: Cash, Money Market Guaranteed Investment Certificates (GICs) Bonds Mutual Funds Stocks ETF’s * Not a full list of all available investment options

Your Investment Portfolio Your portfolio should reflect: Your investment time horizon Your investment knowledge and experience Your goals and objectives Your risk tolerance

Don’t Let Your Emotions be Your Guide The Cycle of Market Emotions Point of maximum financial risk Euphoria Thrill Excitement Optimism Anxiety Denial Fear Desperation Optimism Panic Relief Capitulation Hope Despondency Depression Point of maximum financial opportunity Chart source: Westcore Funds / Denver Investment Advisers LLC, 1998

Asset Allocation An investment strategy that aims to balance risk and reward by apportioning a portfolio’s assets according to an individual’s goals, risk tolerance and investment horizon Source: investopedia. com

SISIP Financial Insurance RSP vs TFSA Investments Financial Counselling Pensions

TFSA Overview Savings & investment vehicle introduced in 2009 Available to Canadian residents 18 yrs+ (must file tax returns) As of 2019 total cumulative contribution limit $63, 500 Contributions are not tax deductible and investments grow tax-free while inside the plan Source: Canada Revenue Agency

TFSA Tax Benefits Withdrawals are tax-free and not considered income Withdrawals do not affect Federal income-tested benefits & credits such as OAS, GIS, Employment Insurance or Canada Child Benefit Interest, dividends and capital gains earned in a TFSA are not subject to tax Source: Canada Revenue Agency

RRSP Overview Contributions are tax-deductible Growth in tax-sheltered while in plan Withdrawals are fully taxable & you will be issued a T 4 RSP for every dollar withdrawn You can contribute 18% of earned income up to a max of $26, 500 for 2019 (less PA) Source: Canada Revenue Agency

RSP Tax Benefits Contributions lower your taxable income A Spousal RSP can reduce your combined tax burden You can use funds in your RSP to buy your first home or pay for your education (HBP & LLP) Source: Canada Revenue Agency

TFSA or RRSP? TFSA RRSP Can be used for short or long-term goals Intended for retirement savings Contributions are with after-tax income Contributions are tax-deductible Withdrawals are tax-free Fully taxable upon withdrawal Growth is tax-free Growth is tax-deferred No earned-income needed Earned income is required Spousal rollover available Use when income is similar or lower vs retirement Use when income is high vs retirement

Resources & Links Investor Education by Ontario Securities Commission www. getsmarteraboutmoney. ca Canada Revenue Agency www. cra-arc. gc. ca CAF Know Your Benefits www. forces. gc. ca (CAF Community -> Compensation & Benefits -> Know Your Benefits) sisipci. ca sisipt 100. ca supportourtroops. ca

Our Partners Provided by London Life Segregated Funds Mutual funds are provided through Fund. EX Investments Inc. Support Our Troops Fund

www. sisip. com 1 -800 -267 -6681

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