Canadian Personal Finance Blog

The markets had a rally yesterday and many stocks had nice comebacks, but will it last? All of this hinges on some kind of remedy on the mess in the U.S., so only time will tell on this one.  Will it all come back to where we were before this mess? Most stocks will, but some may take a long time to come back (my guess anything to do with Financial Institutions in the states, or that had exposure to this mess).

No Trigger For Canadian Housing Bubble Burst

The CIBC is claiming their is no trigger to cause a housing price meltdown similar to the one in the U.S., since we don’t have sub-prime loans and we only have a small percentage of non-conforming mortgages. Good to hear someone say that, but wasn’t the CIBC one of the Canadian banks most affected (effected?) by this whole mess in the U.S.? 

GDP Up in July

The Canadian GDP was up 0.7% in July which is good and is larger than the increases of only 0.1% in May and July. This information while useful also precurses the current financial mess that we are in, but it is still heartening to think that the Canadian Economy for now is doing ok.

GDP for July 2008

Another Surplus for 2008

Jim Flaherty announced that this year Canada will have a budget surplus of almost $3B. That news can only help the Conservatives during the election, and just makes me wonder what will be done with that extra money? My hope is more National Debt pay down, which will help our kids as much as any Green Tax might (IMHO).

Fraud Remedied

TD has repaid me the money that was defrauded from my account, using a duplicate made of my wife’s access card (I am a Victim of Debit Card Fraud). All of it was paid back, which was good, but it did take a while, so I owe some money on my secured line of credit as well. TD phoned to say that the case had been referred to the police and would not comment any further. The next time I am in Montreal I will look for Bar Le Bievre which was where the withdrawals came from, just for my own curiousity.

One of the options I have as part of my severance is what to do about my pension.

My employers pension was a Defined Benefit (up until January 1 this year), it is now a different plan (and my old pension has been capped).

The options I have are:

1. Leave my money in my former (or soon to be) employer’s pension scheme and start drawing from it at either age 55 or later.
2. Take the money out and put it into a Locked In Retirement Account, or at least the portion that the government allows.

As background my current employers pension plan is under funded, by a fairly large amount. I also have passed a point, so that I can draw from the pension when I am 55.

The question now is, do I leave the money in, or take it and run. My wife and I have decided to take the money and run, just for safety sake, given rumors I am hearing, and the fact that the fund is under funded significantly.

I am curious to hear if there is anyone out there that has gone through this and what they did in this situation. Either comment, or if you want send me an e-mail at bigcajunman AT gmail.com, if you don’t want to publicly make any statements.

Monday I spent a good 2 hours with a Personal Finance Planner, that was made available to me by my soon to be former employer, and their right management team. I won’t divulge the name of the planner, just because I don’t feel right doing a “review” of their services, since I got them for a large discount.

Scope of Discussions

The scope of my discussions with this gentleman was mostly around what are my options to do with my severance package and what the tax implications would be if I withdrew from my company’s pension plan.

Bill (not the financial planners real first name) collected a fair amount of background information from us, which made my wife a little nervous (since she had not met him before, but I had at a group financial planning session). We were fairly strict in what we did and did not tell him, since we wanted the scope of the discussions to stay mostly around the task at hand (i.e. tax implications of my severance package).

Planning Session

After collecting the information, the financial planner had an already set up Excel spreadsheet with the tax scenarios possible for me and my family. Bill has done this with many (more than 100) former employees of my soon to be former employer. He also had a massive plasma display that he ran this on to show my wife and I what he was calculating. My wife pointed out I will never be getting a display like that for my computer.

He started by filling in some of the numbers he gave me about my yearly income, the size of the severance package, and the size of my pension pay out.

The variables to be dealt with are:

1. Do I take my severance package completely when it is made available?
2. Do I use the RRSP room I have now or later?
3. My employer was gracious enough to allow me to split my severance and take some now, and then some on January 1, 2009, do I do that?
4. What are the implications of me withdrawing from the pension plan?

The financial planner went through all of these scenarios, gave his opinions and dealt with my and my wife’s questions in a professional way.

Outcomes

I think my wife and I had already decided what to do, but we didn’t really have a clear plan of why or how much, I think now we do (at least I hope we do). Simply sitting down with someone with enough Tax savvy and background to “bounce ideas” off was just great and I think I got my moneys worth out of it (remember I got this at a large discount).

Bill did point out that his company does offer many services, and that if I did need them, I should call him (and I wouldn’t expect anything less from a small business owner), but he was not pushy and understood the audience he was dealing with.

Bill also told me his hourly rate, and I think I might think a bit before going back to him, and make sure I was much better prepared than I was this time, because his services do not come cheap (but then again, you pay for expertise, I have always found).

All in all a positive experience, and I would recommend dealing with a financial planner, with NO ties to any insurance company or mutual fund company. Make sure the planner charges you by the hour, for the service he is offering, so you know where he or she is making their money (mostly).