Managing For Retirement Income Colin Smith David Gorveatte

Managing For Retirement Income Colin Smith & David Gorveatte Financial Advisors 318 Main Street Fredericton, New Brunswick E 3 A 1 E 5 Atlantic Canada 2020 Web www. davidgorveatte. com Email colin@davidgorveatte. com Email info@davidgorveatte. com

TERMINOLOGY If the terms don’t make sense, just ask…! Colin Smith & David Gorveatte 2

What some people think of Financial Planning! You can ask questions as we go through this session or you can save them till the end. Just to let you know, we love questions as we consider them a compliment! Thank you, Colin Smith & David Gorveatte 3

RETIREMENT PLANNING True / False 1. ____ A Registered Retirement Income Fund ( RRIF ) is used to save for your retirement. 2. ____ A Net Worth statement is a picture, expressed in dollars, of how much you are worth and does not include what you owe. 3. ____ RRSP's must be closed and transferred to a RRIF or Annuity by your 71 st Birthday. 4. ____ The best time to take money out of your Registered Retirement Savings Plan (RRSP) is when you are in your lowest tax bracket as opposed to waiting until age 71. 5. ____ A RRIF allows you to draw money until the age of 90 or until the money runs out, whichever comes first. 6. ____ An Annuity will generally pay more per month to a female. 7. ____ Severance pay or Retiring Allowance is taxable when it is received. 8. ____ Mutual Funds are covered by the Government's Canadian Deposit Insurance up to $ 100, 000. 00 in Value. 9. ____ You must have 10% of your RRSPs in a HIGH RISK investment. 10. ____ The purchaser of a Spousal RRSP is also the owner. 11. ____ Once you reach age 65, your income tax rate goes down no matter much income you receive. Colin Smith & David Gorveatte 4

Some useful Web links Colin Smith & David Gorveatte https: //www. davidgorveatte. com/ CPP Changes https: //www. canada. ca/en/services/benefits/publicpensions/cppenhancement. html CPP Survivor benefit explained: http: //www. advisor. ca/tax-news/shedding-light-on-the-cpp-survivor-benefit 241094 Government of Canada On-line Tools and Calculators: https: //www. canada. ca/en/services/finance/tools. html What is a Financial Advisor: https: //vimeo. com/238093634/586 a 59 b 9 a 2 Colin Smith & David Gorveatte 5

Cont. Education Savings Grant Site: https: //www. canada. ca/en/revenue-agency/services/tax/individuals/topics/registerededucation-savings-plans-resps/canada-education-savings-programs-cesp. html Good Financial Links: http: //www. theglobeandmail. com/ http: //www. fool. com/ Canadian Retirement Income Calculator: https: //srv 111. services. gc. ca/General. Information/Index STOCK MARKET LINKS: Toronto Stock Exchange New York Stock Exchange Dow Jones Exchange http: //www. tsx. com/ http: //www. nyse. com/ http: //www. dowjones. com/ Disclaimer All of these sites were working as of Sept. 11, 2020 David Gorveatte and Investia Financial Services Inc. do not make any representation that the information in any linked site is accurate and will not accept any responsibility or liability for any inaccuracies in the information not maintained by them, such as linked sites. Any opinion or advice expressed in a linked site should not be construed as the opinion or advice of David Gorveatte or Investia Financial Services Inc. The information in this communication is subject to change without notice. Colin Smith & David Gorveatte 6

TYPES OF RRSP’S AVAILABLE A. GUARANTEED PRODUCTS - Low Risk - variable rate (Savings Accounts) - fixed rate (GIC’s, Term Deposits) B. MUTUAL FUNDS - Moderate to Higher Risk - ultra conservative, i. e. money market funds - conservative, i. e. mortgage or bond funds - moderate, i. e. preferred stock funds - high, i. e. common stock funds C. SELF-ADMINISTERED - Varying Risk - can contain anything from conservative products like GIC’s all the way up to High Risk speculative investments Source: Canada Revenue Agency Colin Smith & David Gorveatte 7

How to allocate your investments Time period for investing 7 plus yrs. Percentage allocation HI _____% _________ 3 to 7 yrs. ______% MED __________________ 1 to 3 yrs. _____% LOW Colin Smith & David Gorveatte 8

RISK 45 scale Hi Med Low 0 5% Down 20% Down 50% Drop Risk is measured as Standard Deviation in our industry and goes from 0 to 45 Colin Smith & David Gorveatte 9

How to look at risk Imagine a 45 foot high ladder straight up in the air and each rung is a foot high. If you fall off the ladder at 5 feet it will hurt your pride, but at 30+ feet it will break bones!!! This is how I explain RISK. Colin Smith & David Gorveatte 10

Colin Smith & David Gorveatte 11

RRSP Contribution Limits 18% of earned income from the prior year to a maximum of: YEAR Maximum deposit. 2010 2011 2012 2013 2014 2015 2016 2017 $ 22, 000 $ 22, 450 $ 22, 970 $ 23, 820 $ 24, 720 $ 25, 370 $ 26, 010 2018 $26, 230 2019 $26, 500 2020 $27, 230 Colin Smith & David Gorveatte 12

PEI Tax table Combined Federal and Provincial Tax 2020 TAXABLE INCOME (for over age 65, see *NOTE) Lower Upper Limit $ 0. 00 to $ 10, 000 $ 10, 001 to $ 12, 298 $ 12, 299 to $ 31, 984 $ 31, 985 to $ 48, 535* $ 48, 536 to $ 63, 969 $ 63, 970 to $ 97, 069* $ 97, 070 to $ 99, 490 $ 99, 491 to $150, 473 $150, 474 to $214, 368 $214, 369 and over Interest and Regular Income 0. 00% 9. 80% 24. 80% 28. 80% 34. 30% 37. 20% 42. 70% 44. 37% 47. 37% 51. 37% * Additional clawback taxes for income thresholds over $38, 580 and $79, 054 based on 2020 Tables. See Federal Tax Worksheet for details. Source: CRA The 2020 federal personal amount is increased to $13, 229 for taxpayers with net income of $150, 473 or less. For incomes above this threshold, the additional amount is reduced until it becomes zero at net income of $214. 368. No changes have been made to the marginal tax rates above to reflect this change. Colin Smith & David Gorveatte 13

Nova Scotia Tax table Combined Federal and Provincial Tax 2020 TAXABLE INCOME (for over age 65, see *NOTE) Lower Limit $ 0. 00 to $ 8, 482 to $ 12, 299 to $ 25, 001 to $ 29, 591 to $ 48, 536 to $ 59, 181 to $ 75, 000 to $ 93, 001 to $ 97, 070 to $150, 001 to $150, 474 to $214, 369 and over Upper Limit $ 8, 481 $ 12, 298 $ 25, 000 $ 29, 590 $ 48, 535* $ 59, 180 $141, 122 $150, 473 $160, 776 $214, 368 $150, 473 $214, 368 Interest and Regular Income 0. 00% 8. 79% 23. 79% 24. 32% 30. 48% 35. 98% 37. 70% 37. 17% 38. 00% 43. 50% 47. 00% 50. 00% 54. 00% * Additional clawback taxes for income thresholds over $37, 790 and $77, 580 based on 2019 Tables. See Federal Tax Worksheet for details. Source: CRA The 2020 federal personal amount is increased to $13, 229 for taxpayers with net income of $150, 473 or less. For incomes above this threshold, the additional amount is reduced until it becomes zero at net income of $214. 368. No changes have been made to the marginal tax rates above to reflect this change. Colin Smith &David Gorveatte 14

New Brunswick Tax table Combined Federal and Provincial Tax 2020 TAXABLE INCOME (for over age 65, see *NOTE) Lower Upper Interest and Limit Regular Income $ 0. 00 to $ 10, 459 0. 00% $ 10, 459 to $ 12, 298 9. 68% $ 12, 299 to $ 43, 401* 24. 68% $ 43, 402 to $ 48, 535 29. 82% $ 48, 536 to $ 86, 803* 35. 32% $ 86, 804 to $ 97, 069 37. 02% $ 97, 070 to $141, 122 42. 52% $141, 123 to $150, 473 43. 84% $150, 474 to $160, 776 46. 84% $160, 777 to $214, 368 49. 30% $214, 369 and over 53. 30% * Additional clawback taxes for income thresholds over $37, 790 and $77, 580 based on 2019 Tables. See Federal Tax Worksheet for details. Source: CRA The 2020 federal personal amount is increased to $13, 229 for taxpayers with net income of $150, 473 or less. For incomes above this threshold, the additional amount is reduced until it becomes zero at net income of $214. 368. No changes have been made to the marginal tax rates above to reflect this change. Colin Smith &David Gorveatte 15

Newfoundland Tax table Combined Federal and Provincial Tax 2020 TAXABLE INCOME (for over age 65, see *NOTE) Lower Limit $ 0. 00 to $ 13, 230 to $ 19, 373 to $ 20, 538 to $ 25, 907 to $ 37, 930 to $ 48, 530 to $ 75, 859 to $ 97, 070 to $135, 433 to $150, 474 to $189, 605 to $214, 369 and Up Upper Limit $ 13, 229 $ 19, 372 $ 20, 537 $ 25, 906 $ 37, 929 $ 48, 535 $ 75, 858 $ 97, 069 $135, 432 $150, 473 $189, 604 $214, 368 Interest and Regular Income 0. 00% 15. 00% 23. 70% 39. 70% 23. 70% 29. 50% 35. 00% 36. 30% 41. 80% 43. 30% 46. 52% 47. 52% 51. 30% * Additional clawback taxes for income thresholds over $37, 790 and $77, 580 based on 2019 Tables. See Federal Tax Worksheet for details. Source: CRA The 2020 federal personal amount is increased to $13, 229 for taxpayers with net income of $150, 473 or less. For incomes above this threshold, the additional amount is reduced until it becomes zero at net income of $214. 368. No changes have been made to the marginal tax rates above to reflect this change. Colin Smith &David Gorveatte 16

Tax Consequences of a Withdrawal From a Registered Product Lump sums withdrawn from an RRSP or RRIF: $ 0. 00 to $ 5, 000 $ 5, 001 to $15, 000 $15, 001 and over % Tax Withheld at source: * 10% 20% 30% *These withheld taxes are applied to the total taxes you will be required to pay when you file your return. Colin Smith & David Gorveatte 17

SEVERANCE OR RETIRING ALLOWANCE ROLLOVER INTO RRSP BEFORE 1988 SERVICE $2, 000 for every year of vested RPP service $3, 500 for every other year of service AFTER 1988 SERVICE $2, 000 for every year of service AFTER 1995 SERVICE No further accumulation of years of service Most people have already dealt with this issue. Source: Canada Revenue Agency TD 2 Form "Tax Deduction Waiver in Respect of Funds to be Transferred” Colin Smith & David Gorveatte 18

CONTRIBUTION TO AN R. R. S. P. IN RESPECT OF A RETIRING ALLOWANCE or SEVERANCE PAY Identification: Name: ____________ Address: _________________________ Social Insurance Number: ____ Details Of Contribution For Which Tax Receipts Will Be Issued Enclosed is a cheque(s) for $ ______which is to be deposited as follows: 1. To Personal RRSP # the amount of $______which qualifies under paragraph 60(j. 1) of the Income Tax Act as the eligible portion of a retiring allowance. 2. $________ which was subject to withholding tax at source (unless exempted from withholding by a letter from Canada Revenue Agency). This amount which is not being transferred under paragraph 60 (j. 1) is to be applied as follows: 3. Please Defer $ to Jan. 2/20___ Deposit Information Personal Plan # ________ $__________ Spousal Plan # ________ $__________ From (Name of Employer): _______________ Name or Plan Issuer: _______________ Address of Plan Issuer: _____________ Certification: I certify that the issuer of the receiving plan has advised me that the plan is registered, or that the issuer of the recipient retirement savings plan will apply to register the plan under the Income Tax Act. Date ____/_____ Individual's Signature ______________ I certify that the transfer of the amount stated above will be made directly to the issuer of the receiving plan, and that the amount transferred will be reported on a T 4 A Supplementary, Statement of Pension, Retirement Annuity, and Other Income. Date ____/____ Employers Signature ______________ Colin Smith & David Gorveatte 19

ATTRIBUTION RULES – SPOUSAL RRSP • Bill C-23 – law on December 19, 1986 – change the wording of the Income Tax Act. • This allowed CRA to extend the period of attribution from 2 yrs to 3 yrs. • If you buy a Spousal RRSP you have to make sure that no deposits are made in the last 3 yrs prior to a withdrawal or they will be charged back to the contributor! See link below: https: //www. canada. ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related -plans/making-withdrawals/withdrawing-spousal-common-law-partner-rrsps. html Colin Smith & David Gorveatte 20

Which is Better? Getting a better return or saving more money? • Lets look at saving $ 50. 00 a month at 8% (Compounded annually) versus saving $100. 00 a month at 4% (compounded Annually) from age 25 to 65. • $50 x 40 yrs = $24, 000 vs $100 x 40 yrs =$48, 000 • Which amount will be worth more by age 65. • Show of hands for the $50 vs the $100. • Now let’s look at the results. Colin Smith & David Gorveatte 21

Colin Smith & David Gorveatte 22

Colin Smith & David Gorveatte 23

Imagine if you were able to save $100 mth at 8% = $324, 180 Colin Smith & David Gorveatte 24

And the winner is! 40 yrs at 8% $162, 090 vs 40 yrs at 4% $ 116, 486 Colin Smith & David Gorveatte 25

PENSION SPLITTING You can split your pension income up to a Maximum of 50% of your qualified pension amount. This can save you money but you have to be cautious that you split the correct amount, and keep an eye on the medical expenses and tax brackets you are in to get the maximum benefit. We will now look at an actual case that I worked on to illustrate this point. Colin Smith & David Gorveatte 26

PENSION SPLITTING The first slide is what the 2018 tax return looked like with NO pension split. Person A made : CPP $ 6, 900. 00 Other $ 34, 632. 00 Total $ 41, 532. 00 Deductions $ 3, 500. 00 Net Income $ 38, 032. 00 Person B made : CPP $ 8, 300. 00 Pension $ 57, 977. 00 Total $ 66, 277. 00 Deductions $ 5, 500. 00 Net Income $ 60, 777. 00 Medical Expenses were $ 6, 000. 00 Deductible Expense for A = $ 6, 000. 00 less 3% of $ 38, 032. 00 = ($ 38, 032. 00 x. 03 = $ 1, 140. 96) so $ 6, 000. 00 - $ 1, 140. 96 = $ 4, 859. 04 Refund Due for A = $ 2, 085. 00 Tax due for B = $ 1, 677. 00 Total = $ 408. 00 Refund! Colin Smith & David Gorveatte 27

PENSION SPLITTING If you take the pension of person B and transfer ½ to Person A, this is what it would look like: $57, 977. 00/2 = $28, 988. 50 = ½ of the pension. Person A Made CPP $ 6, 900. 00 Other $ 34, 632. 00 Split Pension +$ 28, 988. 50 Total $ 70, 520. 50 Deductions $ 3, 500. 00 Net Income $ 67, 020. 50 Person B Made CPP $ 8, 300. 00 Pension $ 57, 977. 00 Split Pension -$ 28, 988. 50 Total $ 37, 288. 50 Deductions $ 5, 500. 00 Net Income $ 31, 788. 50 Medical Expenses were $6, 000. 00 Deductible Expense for B = $6, 000. 00 less 3% of $31, 788. 50 = ($31, 788. 50 x. 03 = $ 953. 66) so $6, 000. 00 - $953. 66 = $5, 046. 34 Tax Due for A = $3, 269. 00 Refund for B = $3, 455. 00 Total = $186. 00 Refund! Loss of $ 222. 00 Colin Smith & David Gorveatte 20

PENSION SPLITTING Reallocation of income at optimal pension splitting. Person A CPP $ 6, 900. 00 Other $ 34, 632. 00 Split Pension +$ 2, 460. 00 Total $ 43, 992. 00 Deductions $ 3, 500. 00 Net Income $ 40, 492. 50 Person B CPP $ 8, 300. 00 Pension $ 57, 977. 00 Split Pension -$ 2, 460. 00 Total $ 63, 817. 00 Deductions $ 5, 500. 00 Net Income $ 58, 317. 00 Medical Expenses were $6, 000. 00 Deductible Expense for A = $6, 000. 00 less 3% of $40, 492. 00 = ($40, 492. 00 x. 03 = $ 1, 214. 76) so $6, 000. 00 - $1, 214. 76 = $4, 785. 24 Refund for A = $1, 856. 00 Tax Due for B = $ 808. 00 Total = $1, 048. 00 Refund! Gain of $ 862. 00 Colin Smith & David Gorveatte 29

Tax Free Savings Accounts This product allows you to save money in an investment account that does not attract any tax. The Government has, in my opinion, mislabeled this product; it should be called the TAX FREE INVESTMENT PLAN to reflect the true nature of this product. You can put any investment in this plan that you can put in your RRSP, and like an RRSP, you can name a beneficiary or a successor holder. Some people even suggest that this new product will replace the RRSP as a long term savings plan for investors. Previous contribution room will be tracked and carried forward by Revenue Canada. Tax Free Savings Accounts were set up by the Federal Government to help people save money in a better environment free from tax. The plan was implemented in the 2008 Federal Budget to be effective Jan 1, 2009. Colin Smith & David Gorveatte 30

Tax Free Savings Accounts To use this plan you must set up a separate account with your Financial Institution or Investment Firm to track the contributions and subsequent Deposits or Withdrawals. Once open, the Government will inform you of your unused contribution amount annually, similar to your RRSP limits. Common misconceptions: • You must buy one at a Bank. • You can only have a Savings account product for your Investment. • You can only earn interest on the account. • The rates are very low. • Why bother as banks don’t send us interest slips for under $100. • I will get one when I have lots of money. Colin Smith & David Gorveatte 31

Tax Free Savings Accounts To deposit money into a TFSA you have cumulative predetermined limits set by the Federal Government annually. The current maximum deposit is $ 69, 500. 00 and can be done all at once. Contribution Limits: * 2009 - 2012 = $5, 000/year * 2013 - 2014 = $5, 500/year * 2015 = $10, 000/year * 2016 - 2018 = $5, 500/year * 2019 - 2020 = $6, 000/year For more information, click on the links below. TFSA: http: //www. fcac-acfc. gc. ca/eng/resources/publications/savings/Pages/Thinking -Vouspens. aspx TFSA vs RRSP calculator: http: //www. taxtips. ca/calculators/tfsavsrrspcalculator. htm Colin Smith & David Gorveatte 32

MAXIMIZE YOUR RRSP DEPOSITS: The biggest tip is to maximize your deduction with all the tools available. Know what tax bracket you are in so you can get the best return from the deduction you will be claiming. Also, consider Spousal RRSPs if the conditions warrant. You can use the Tax Deduction at Source link below to get the rebate up front for your RRSP deduction and compound the amount of saving: $ 100. 00 deposited in an RRSP will save about 30% in taxes. So $ 100. 00 + $ 30. 00 = $ 130. 00 @ 30% = $ 39. 00 dollars saved So $ 139. 00 less $ 39. 00 dollars saved in taxes = $ 100. 00 out of pocket. See web link form: Tax deduction at source forms: http: //www. cra-arc. gc. ca/E/pbg/tf/t 1213/README. html Colin Smith & David Gorveatte 33

SOME QUESTIONS YOU SHOULD BE ABLE TO ANSWER BEFORE YOU RETIRE! • Where will the income I need come from? • What cash will be available to supplement my income or meet any financial emergencies? • Do I have enough cash to retire ? • How much tax will I have to pay? • Is my money SAFE? ? ? - In the right place for me? - Safe from excessive taxes? - Safe from excessive losses? Colin Smith & David Gorveatte 34

CREATING YOUR PERSONAL RETIREMENT PORTFOLIO Step 1. What are your retirement resources? Step 2. What are your retirement priorities? Step 3. What is your retirement strategy? Colin Smith & David Gorveatte 35

RETIREMENT RESOURCES 1. Pension from Employment 2. Retirement Allowance 3. R. R. S. P. 4. Non Registered Savings 5. TFSA 6. Fixed Assets 7. C. P. P. - (Canada Pension Plan) 8. O. A. S. - (Old Age Security) Colin Smith & David Gorveatte 36

THE ABC's OF MANAGING FOR RETIREMENT INCOME These will give you an understanding of the new options within your reach. A. SETTING YOUR RETIREMENT PORTFOLIO OBJECTIVES. • • • Maintain your income. Keep pace with inflation. Preserve your estate. Control depletion of capital. Plan spending of capital. Colin Smith & David Gorveatte 37

THE ABC's OF MANAGING FOR RETIREMENT INCOME Some peoples ideas of how they plan to retire! Colin Smith & David Gorveatte 38

THE ABC's OF MANAGING FOR RETIREMENT INCOME These will give you an understanding of the new options within your reach. B. CREATE YOUR PERSONAL RETIREMENT PORTFOLIO. • • Recognize your objectives. Balance your short and long-term needs. Achieve safety through diversification. Maintain portfolio flexibility. Colin Smith & David Gorveatte 39

THE ABC's OF MANAGING FOR RETIREMENT INCOME These will give you an understanding of the new options within your reach. C. REVIEW YOUR RRSP RETIREMENT OPTIONS. • • • Life Annuities. Term Certain Annuities. GMWBs (Guaranteed Minimum Withdrawal Benefit) RRIF - (Registered Retirement Income Funds) Take it out in cash and pay the taxes. ( Not a good option!) Colin Smith & David Gorveatte 40

Taking it all in cash does have its drawback such as Excessive Tax! Hard to sleep on a lumpy bed as well! Colin Smith & David Gorveatte 41

REVIEW YOUR RRSP RETIREMENT OPTIONS When choosing a retirement income strategy that will maximize your resources, you are faced with a wide variety of investment possibilities. Consider the following: Colin Smith & David Gorveatte 42

LIFE ANNUITIES There are four types of Life Annuities: 1. STRAIGHT LIFE Highest rate of return, but payments cease at death. Similar to Old Age Security payments. 2. MINIMUM GUARANTEED TERM - If death occurs before a specified period, for example 10 years, the value of the remaining payments will go to your estate or beneficiaries. 3. JOINT AND LAST SURVIVOR Annuity payments are guaranteed for the lifetime of two individuals, ensuring the security of the surviving partner. Similar to C. P. P. or Q. P. P. payments. 4. INSTALLMENT REFUND Same as straight life, but benefits will continue until all the remaining principal is paid to your beneficiary. These all provide a regular payment over a person's lifetime. Colin Smith & David Gorveatte 43

TERM CERTAIN ANNUITY This is not gender specific and it is simply a product to pay back both your principal and any earned interest on the account from the date of purchase to when the person reaches age 90. Upon death, either your estate will receive the commuted value of the plan, or payments will continue to your beneficiary for the period remaining. Term Certain to age 90 annuities provide the security of long term income with the attraction of higher monthly payments than a life annuity purchase with the same funds. Term certain annuities can be purchased for a term of 10, 15 or 20 years, or to age 90. Term Certain to age 90 Premium $ 50, 000. 00 Age 65 Age 71 $181. 22 $201. 33 $251. 25 Source RBC Financial “Rates Subject to change” Colin Smith & David Gorveatte 44

ANNUITY RATE QUOTATIONS PREMIUM $50, 000 Quote rate as of Feb. 5, 2020 Male Age 60 Age 65 Age 70 $254. 84 $245. 44 $219. 22 $302. 58 $281. 96 $234. 53 Age 65 Age 70 LIFE No Guarantee $200. 26 LIFE 10 $198. 15 LIFE 20 $191. 08 $228. 94 $224. 52 $210. 24 $268. 09 $258. 44 $229. 39 Joint & Last Survivor Age 60 Age 65 Age 70 $201. 74 $201. 39 $197. 64 $231. 58 $230. 40 $219. 23 LIFE No Guarantee $220. 18 LIFE 10 $215. 70 LIFE 20 $201. 82 Female J&L No Guarantee J&L 10 J&L 15 Age 60 $179. 54 $179. 43 $178. 21 Source BMO Insurance “Rates Subject to change” Colin Smith & David Gorveatte 45

GMWB “Guaranteed Minimum Withdrawal Benefit” GMWB’s CAN HELP PROVIDE: • Predictable income guaranteed not to decrease, no matter how investments perform • Sustainable income that will last for your life and the life of your spouse • Guaranteed lifetime income available as early as age 55, with higher payout percentages at older ages if income is deferred • Potentially increasing guaranteed income to help keep pace with inflation • Benefits that help ensure the smooth transition of your estate • Potential creditor protection Exceeding the withdrawal thresholds and/or withdrawals taken prior to the Election of LWA (Lifetime Withdrawal Amount) may have a negative impact on future income payments. The LWA becomes available on January 1 st of the year the annuitant or the younger of the annuitant and the Joint Life (if applicable) turns age 55. The Joint Life must be the spouse or common-law partner (as defined by the Income Tax Act (Canada)) of the annuitant. Once named, the Joint Life may not be changed. Other conditions may apply. Soon to be obsolete! Colin Smith & David Gorveatte 46

REGISTERED RETIREMENT INCOME FUND This product is simply an investment vehicle which allows you to roll over your maturing RRSP's, up to the end of the calendar year you turn 71. The Government has a pre-determined minimum payment schedule which specifies the least amount you can withdraw each year after age 71. This does not limit you to that amount as you can take any amount in excess of the "minimum“ amount, but a withholding tax, at source, will apply. The major benefit of the RRIF is that it allows any remaining capital in the RRIF to be transferred to your spousal beneficiary’s RRSP or RRIF TAX DEFERED or transferred to your estate and subject to tax. I have found in my practice this is the go-to fund for 99% of my customers due to its flexibility. Colin Smith & David Gorveatte 47

RRIF PAYMENT CALCULATOR Based on an initial investment amount of $25, 000, an interest rate of 6. 00% and starting at age 55 the following table will illustrate how the minimum payment is calculated: If you draw the minimum payment required, your first year’s payment is zero and the next years payment would be $779. 10. Thereafter, your payments will depend on your age and the remaining balance in the account. This illustration assumes your payments do not begin until the start of the year following the year of purchase. You can start your RRIF at 71 and take your first year's payment at age 72 for maximum deferral. Colin Smith & David Gorveatte 48

RRIF Payment Schedule Age 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 Beginning RRIF Capital $25, 000. 00 $26, 500. 00 $27, 310. 90 $28, 122. 03 $28, 929. 14 $29, 730. 47 $30, 524. 28 $31, 302. 65 $32, 063. 30 $32, 800. 76 $33, 505. 97 $34, 176. 09 $34, 801. 51 $35, 375. 74 $35, 888. 69 $36, 333. 71 $36, 697. 04 $36, 961. 26 RRIF Minimum% 0. 00% 2. 94% 3. 03% 3. 13% 3. 23% 3. 33% 3. 45% 3. 57% 3. 70% 3. 85% 4. 00% 4. 17% 4. 35% 4. 55% 4. 76% 5. 00% 5. 28% 5. 40% Colin Smith & David Gorveatte Annual Payout 0. 00 $ 779. 10 $ 827. 52 $ 880. 22 $ 934. 41 $ 990. 02 $1, 053. 09 $1, 117. 50 $1, 186. 34 $1, 262. 83 $1, 340. 24 $1, 425. 14 $1, 513. 87 $1, 609. 60 $1, 708. 30 $1, 816. 69 $1, 937. 60 $1, 995. 91 49

RRIF Payment Schedule Age 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 Beginning RRIF Capital $37, 183. 03 $37, 357. 79 $37, 481. 07 $37, 548. 54 $37, 552. 29 $37, 488. 45 $37, 353. 49 $37, 136. 84 $36, 832. 32 $36, 434. 53 $35, 931. 74 $35. 317. 30 $34, 582. 70 $33, 714. 68 $32, 706. 61 $31, 545. 52 $30, 217. 46 $28, 709. 61 RRIF Minimum% 5. 53% 5. 67% 5. 82% 5. 99% 6. 17% 6. 36% 6. 58% 6. 82% 7. 08% 7. 38% 7. 71% 8. 08% 8. 51% 8. 99% 9. 55% 10. 21% 10. 99% 11. 92% Colin Smith & David Gorveatte Annual Payout $2, 056. 22 $2, 118. 19 $2, 181. 40 $2, 249. 16 $2, 316. 98 $2, 384. 27 $2, 457. 86 $2, 532. 73 $2, 607. 73 $2, 688. 87 $2, 770. 34 $2, 853. 64 $2, 942. 99 $3, 030. 95 $3, 123. 48 $3, 220. 80 $3, 320. 90 $3, 422. 19 50

RRIF Payment Schedule Age Beginning RRIF Capital 91 92 93 94 95 & over $27, 010. 00 $25, 103. 09 $22, 971. 84 $20, 596. 55 $17, 962. 25 RRIF Minimum% 13. 06% 14. 49% 16. 34% 18. 76% 20. 00% Annual Payout $3, 527. 51 $3, 637. 44 $3, 753. 60 $3. 870. 09 $3, 592. 45 Information and interactive calculators are made available to you as self-help tools for your independent use. We cannot and do not guarantee their accuracy or their applicability to your circumstances. We encourage you to seek personalized advice from qualified professionals regarding all personal financial issues. Updated January 2020 with new rates Calculations were provided by "KJE Computer Solutions, LLC" Colin Smith & David Gorveatte 51

Questions I get asked a lot at these sessions! I would now like to cover some questions I have been asked a lot over the years and give you my thoughts on them. Life insurance: Should I have it and what type to buy? Reverse Mortgage: What is it and how does it work? What can a Financial Planner can do for you? See vimeo link for explanation! https: //vimeo. com/238093634/586 a 59 b 9 a 2 How do you find a good Financial Planner? This is a common question I get asked as most people have travelled here to attend this presentation and want to find a good advisor when they get home. I also get, What do they cost? I always say the right one is PRICELESS! Colin Smith & David Gorveatte 52

Life Insurance can be broken down into 2 categories: If I Die: Die Term Ins. & Group Ins. When I Die: Die Universal Life Ins. & Whole Life Ins. When you buy insurance you are doing it to fill a void in your financial Plan. If you had lots of money, your insurance need would be less than if you were young and had a family that was counting on you to help support them. Its basically to provide the cash you don’t have when you die early. We will now discuss how insurance works and which type will work best in your situation. Colin Smith & David Gorveatte 53

Life Insurance If I Die: Die Term Ins. & Group Ins. If you look at all insurances, they are calculated on the RISK of having to pay out the policy face value or coverage. This means if there is a low chance they will have to pay, then the premiums will be low. Let’s look at the math behind this decision which is made by Actuaries who calculate mortality in the back rooms of Life Ins Companies to get the cost. They base it on 1000 people who are the same gender and age to see how many will die each year based on statistics. Chance of Dying Actuarially Mature! X 100% Term Insurance rates keep rising as you get older. _______ 0% 30 40 50 60 AGE 70 80 Colin Smith & David Gorveatte 90 100 54

Life Insurance When I Die: Die Universal Life Ins. & Whole Life Ins. This is where you pay the same premium amount for the life of the contract or shorter if you buy a paid-up policy. The premiums are higher but there is a cash value attached to that overfunding amount. Chance of Dying Actuarially Mature! X 100% Whole life Premiums ________________________________ 0% 30 40 50 60 AGE 70 80 Colin Smith & David Gorveatte 90 100 55

Reverse Mortgages This is a product that is widely advertised and can be a good fit for someone living in Toronto or Vancouver where house prices keep rising at ridiculous rates. In Atlantic Canada, the case is not very strong. Here is a breakdown of the cost to set one up. Colin Smith & David Gorveatte 56

Reverse Mortgage It should also be noted that costs and fees for setting this up are very similar to the alternatives out there. For more on this, see this link: https: //www. reversemortgagepros. ca/reverse-mortgage/alternatives-to-areverse-mortgage/ Most people are usually considering a Home Equity Line Of Credit – which comes with almost identical set-up costs (minus the administrative fee – although some lenders do charge set-up fees). Here are some articles comparing this to a HELOC and other factors, like higher interest rates charged on the Reverse Mortgage vs a HELOC or regular Mortgage https: //www. reversemortgagepros. ca/reverse-mortgage -vs-heloc/ https: //www. reversemortgagepros. ca/reverse-mortgage -rates-penalties/#more-2162 Colin Smith & David Gorveatte 57

Reverse Mortgage If the interest cost is greater than the growth value of your home, then you will have a point that the value of your home will be less than the debt against it. These issues are covered in the attached Link: Pros and Cons of a reverse Mortgage: https: //www. reversemortgagepros. ca/reverse-mortgage-canada/cons-of-a -reverse-mortgage/ Please keep in mind, like all things, these are not one size fits all. Colin Smith & David Gorveatte 58

How do you find a good Financial Planner? This is always a good question to ask as not all of us are created equal. There are several types of Advisors and they each come with certain skill sets. I would look for someone who has had some training and education and is backed by credential like a CFP or CLU® as they are very good ones. Also, how does the person get paid is very important so please ask! I want someone who gets paid based on how well I do versus a person who just gets a salary and has no benefit if I make money or a penalty if I lose it. Here is one search engine that will find a good Financial planner in your area. http: //www. fpsc. ca/find-a-planner-certificant There have been some great articles written on the subject and here is one. http: //www. moneysense. ca/save/financial-planning/finding-yourideal-financial-advisor/ Colin Smith & David Gorveatte 59

THANK YOU! Have a Happy Retirement Colin Smith & David Gorveatte Financial Planners 318 Main Street Fredericton, New Brunswick E 3 A 1 E 5 506 -474 -0010 Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated. Mutual funds products are offered through Investia Financial Services Inc. Insurance products provided through multiple insurance carriers. Always check with your accountant when making changes to any tax planning strategy as well. Colin Smith & David Gorveatte 60

Does anybody have any questions! Colin Smith & David Gorveatte 61