A few years ago a friend and her husband separated. It was a relatively amicable divorce as divorces go. She owed him spousal support which is unusual but not unheard of. She also transferred some assets to him as is also normal.
The sad thing is that she felt she had to cash in her RRSPs to pay the legal bills. Now in her 50's, she is starting over to save for retirement.
What could she have done differently?
I don't know all the details but my first thought is why not take a loan? Even if interest rates were high, they would be less than the 50% tax she is paying on her RRSP. It would take a long time for the interest to total up to the tax she will pay this year.
Maybe she could have paid off the bill over time? I don't know.
What I do know is that if this ever happens to you, make sure you talk it through with someone with experience and who knows you. Brainstorm all the potential options before deciding on such an expensive one.
Then take a deep breath and do what you have to do.
And by the way...
This is not the first time I have heard this exact same story. And it won't be the last.
I heard a very sad story the other day.
A young man in his mid-30’s died in his sleep. He left a wife and baby.
It turns out he did not have a will, he was self-employed and did not have employment income – he took dividends from his company. As a result his wife and child will not receive survivor’s benefits or orphan’s benefits. He had not filed his personal income tax return for years. He did not have life insurance either.
AND he was a LAWYER!!!
What the heck?!?
Of all people who should know better, you would think a lawyer would. But when I tell the story, it seems that they do not.
Everyone should have a will to make sure the money goes where you want it to go. If you don’t, the government may take over the management of whatever is left.
Make sure you think through the consequences of all your financial actions - saving income tax today may cause hardship for you and your family down the road. Take a look at your own situation. Review it with your accountant or financial advisor or lawyer or financial success coach.
Make sure your ducks are in a row.
Leave your family with peace of mind.
Have you ever tried to edit your own website and/or blog?
I have to tell you it is VERY frustrating! Three hours to find a photo similar to my page headings and the frustrations of trying to change a category title. All of which resulted in deleting pages and redoing them over and over again only to find the answer when it was all done. Sigh!
There is a saying "Do what you are best at and get others to do the rest". I should have done that today. I coach clients on it. I should practice what I preach but some days we forget.
Think "Who" not "How".
Who can help me out? Who is better at this task than I am? Who can at least guide me to success?
Well I reached out. We shall see if I hear back or have to learn the how.
To your continued success!!
A lot of people work in the USA at some point in their careers and while there, they contribute to a pension or 401K.
Then when it's time to retire in Canada the question is "How to bring the money here?"
I have found that the best article on the topic can be found HERE. Then you just have to find a financial advisor who is willing and able to help you through the process!!
Lately, for some reason, I have been receiving questions about Canadian /American tax and retirement questions. For example:
Have you ever worked in the US for a few years and then moved back home to settle down and create a life? Maybe you were a grad student and had a job while studying or maybe you worked in hi-tech for a couple of years in sunny California. Now it is time to retire and you are thinking, "Hmmm. I paid into US Social Security when I worked there. Maybe I can get some money from them as well as CPP."
Before you get too excited, check out the Social Security Administration's website to see if you qualify. Here is how it works:
When you work and pay Social Security taxes, you earn “credits” toward Social Security benefits. The number of credits you need to get retirement benefits depends on when you were born. If you were born in 1929 or later, you need 40 credits (usually, this is 10 years of work). If you stop working before you have enough credits to qualify for benefits, the credits will remain on your Social Security record. If you return to work later, more credits may be added. We can’t pay any retirement benefits until you have 40 credits. https://www.ssa.gov/benefits/retirement/learn.html#h1
This website is very good and will help you make decisions and learn more about your retirement benefits.