Testimonial from Éric: planning your estate

Retirement and estate planning go hand in hand

Being self-employed is a beautiful adventure, which Éric Savage knows a thing or two about. But when it's time to plan for your retirement, "freedom" also means "no employer contributions." Can you still do it? "Yes," says Éric. As long as you're well prepared.

Last year, Éric Savage saw that one of his colleagues retired at age 59, when he was in the best shape of his life. And soon, it'll be his turn! When he's not giving it his all on movie sets, the 55-year-old producer is quite the adventurer; he and his partner love backpacking around the world to discover the most remote places. In the short run, they'd like to extend those adventures. Their goal is to spend four to six months travelling and work for the rest of the year. For four years now, Éric has been working hard to get there.

"My parents gave me a good financial education. When I had the chance, I put some money into my RRSP and TFSA, so that I could maximize my contributions. So, I needed to make sure I had the right strategy to grow my investments and achieve my objective in time. I turned to Thomas, my long-time advisor at Desjardins."

The right calculations make all the difference

Éric's goal is clear: he gave himself five years to put money aside before going into pre-retirement mode. His partner, who's younger than him, will join him in a few years.

The first thing Thomas did was to calculate whether Éric's savings would be enough. Surprise! Éric must triple the amount he'd been saving, every week! It'll take a great deal of effort but Éric is ready to make the necessary sacrifices.

Thomas recommended that he draw up a notarized will. "Since we didn't have kids, I never thought about it. But Thomas made me understand that my partner wouldn't inherit anything if I died without a will because we're not married," said Éric.

Planning the transfer of his assets and his travels

In an effort to protect their respective investments, both of them decided they'd inherit from one another and they could transfer their RRSPs without any tax impact on the partner. They're also thinking about securing their mutual assets. "We own a duplex and we rely on rental income to help us at retirement. We needed to take that into account and make sure that the other would inherit it if one of us died suddenly," said Éric.

Luckily, since Éric and his partner still live in the duplex and intend to stay there, their advisor informed them that, if one of them died, the other would benefit from the partner's tax rollover, which defers the tax on capital gains. This tax obligation will be settled when the estate of the deceased partner is settled, and for whom a subsequent life insurance will be paid out.

While it's hard to imagine the worst, Éric and his partner are reassured to know that they'd be leaving the other in good financial standing, especially given the fact that they both drew up protection mandates with their notary, "in case something happened to us," said Éric.

Exploring the world, knowing your wealth is secured

Four years after his first meeting with Thomas, Éric is still focused on his goal, even if it hasn't always been easy. "When you're self-employed, you need to have a safety cushion for the unexpected. We've had to deal with water damage, which forced us to take out another mortgage. And, this year, my income was half of what it was last year." But because they've prepared for the worst, the self-employed couple made it through. It only proved to them that they must be ready for anything.

With only a year left to achieving his goal (spending more quality hammock time in far-flung locations!), Éric is confident. He still has a big contract through to 2019 and he feels financially prepared. "To help me grow my assets, my advisor developed my retirement plan and steered me toward Capital regional et cooperative Desjardins shares, which gives me a tax advantage while helping Quebec-based small and medium businesses. When it's the right time, I'll also transfer my RRSP into an RRIF and withdraw from it, while following an investment withdrawal plan to keep my taxes low."

Do you dread being bored when you retire? "Not at all," said Éric. "I've put everything in place to make sure we don't get bored. I even began taking English lessons so I can teach abroad. My partner and I will have everything we need to take care of ourselves and explore the world together." We bet they won't hesitate to take the path less travelled now, knowing their wealth is secured.

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