Stephen Covey, in his classic book, The 7 Habits of Highly Effective People, highlighted as the second habit the need to begin with the end in mind. This habit is instrumental to building a solid financial plan. Only by knowing where you intend to go, and by taking an honest look at where you are today, can you determine the steps required to arrive at your destination. Of course, as life progresses, the destination may shift, but the concept remains: in order to build a plan today, you need to know what you are building towards.

Having a comprehensive written financial plan provides you the means to plan your financial journey, monitor progress and change directions when necessary. Here are 10 steps to help you get there:

  1. Complete a net-worth statement listing all your assets and liabilities.
  2. Establish your financial goals based on your values and your vision.
  3. Know how much money you will need now, five and ten years from now, as well as in retirement. Plan for inflation and taxes.
  4. Increase discretionary savings by decreasing your expenses.
  5. Know your monthly cash flow needs and separate that from major annual expenses such as trips, cars, home renovations, etc.
  6. Reduce or defer income taxes wherever possible.
  7. Develop a sound plan for your estate including wills, powers of attorney, and life insurance.
  8. Create an estate directory.
  9. Review your financial plan at least once a year and adjust your plans and goals as your circumstances change.
  10. Rely on professionals to ensure that your documents are properly drafted and all your concerns are addressed.


If you are not currently retired, it is important for you to know how much you need to retire. That amount is called your retirement number, or financial independence number. Retirement is a dream for many; some wishing to attain it sooner rather than later. Retirement is a matter of income and not of age, so you must know how much income you need monthly, sometimes called your withdrawal rate.

Once you have an idea of how much you need each month, you should make sure that you have set aside a sufficient emergency fund of at least 6 months of your monthly income. You may draw from this emergency fund to cover unexpected payments.

Second, plan for where the money for your retirement will come from. You can start by considering how much you will receive in pensions (e.g., company pension(s), Canada Pension Plan, and Old Age Security). You may request a Statement of Contributions to the Canada Pension Plan.

Once you have that amount, add it to your own investments such as stocks, bonds, guaranteed investment certificates (GICs), mutual funds, etc. Generally, you can expect your pensions and investments to generate between 4% and 6% income annually. However, this rate depends on your risk tolerance, time horizon, and how long your money lasts. For example, if you had $500,0000 and got a 5% rate of return, that means you would be generating $25,000 annually, or $2,083.33 monthly. Here, you want to know what is the minimum rate of return you need annually, and to track this against your actual returns in order to make sure things are going according to the financial plan.

Finally, look at real estate and business. Do you plan to sell off real estate and downsize, or generate income from rental real estate? Do you plan to sell any businesses or generate income from them?

Now that you have identified and quantified all your sources of capital, ask yourself what percentage of capital you would like to have left at 90 (which you can adjust based on your own life expectancy)? Do you want 100% of your money, 50% of your money, or do you want it all spent by then? This will help determine your time horizon as well as your estate wishes. Remember to retire to an income and lifestyle, and not an age; otherwise, you risk retiring with an income that doesn’t adequately support your needs, and a lifestyle that falls short of your expectations.


When they hear “risk management”, many people first think of life insurance. Life insurance is a very important part of any risk management plan, especially if you die young; but what happens if you live too long? If you ask most people how long they want to live, they will tell you that they want to live a very long life. While this longevity is wonderful in theory, it also comes with risks, and is the number one risk in retirement.

A long life comes with a high chance of exposure to a range of issues: long-term care issues, market risks, inflation and deflation risks, regulatory risks, political risks, changes in tax laws, and many more. For example, the longer you live, the higher the chances of you needing long-term care, the cost of which is set to increase significantly over the coming decades. If your financial planning does not properly account for this, and if you require long-term care in the future, then there is a chance that your remaining retirement income will be adversely affected. The longer you live, the more inflation will also continue to eat away at your retirement savings and your purchasing power, and the higher the likelihood that you will increase your withdrawal rate.

To properly manage risk, consider all the potential risks, and address them now while you are still able to do so. It is essentially asking: What are the actions I should take now in order to deal with the potential risks, concerns and obstacles of the future?

This does not mean that a retiree should become risk-averse and avoid uncertainty at all costs, e.g., investing only in bonds and GICs, neglecting stocks and mutual funds. It means that you should be present to potential risks, factor them into your plan, and make informed decisions based on your individual scenario.


Not all income is taxed equally. The tax treatment varies based on different forms of income and tax brackets; hence the importance of having a tax minimization strategy in place. It is hardly fair that you should work your whole life, and retire only to have the government withhold the pension you were promised, or require you to pay as high, or higher taxes while retired than while you were working full-time. So, look to see where you can deduct, divide or defer.

Typically, a retiree has a combination of sources of income to pull from, such as registered investments (RRSP, RRIF, TFSA), non-registered investments, government pensions (CPP, OAS, GIS), savings, etc. One of the most important things to consider in retirement is: What source of income should you draw from first, and when?

Ultimately, there are many variables to consider in tax planning, and there is no one-size-fits-all solution. The factors to consider include: which source of income is best deferred, pension sharing, income splitting, taking tax-efficient income on non-registered investments through Corporate Class funds or a Tax Smart Withdrawal program, looking to use the least tax-efficient sources of income first, avoiding OAS claw backs, and taking advantage of tax credits.

Implementing a tax minimization strategy can be complicated, and so it is best to work with professionals to make sure you are making the right decision. Additionally, with tax laws and your personal situation constantly changing, your strategy should constantly be revisited to make sure it is as tax-efficient as possible.


An estate plan means preparing for the management and disposal of a person’s estate during the person’s life. It also includes the bequest of assets to heirs and the settlement of a person’s estate. As such, very few people find estate planning to be a fascinating topic and unfortunately most associate it with dying. However, having an estate plan is much more than that.

First, an estate plan gives you control over your money and your assets. It allows you to have all your documents (will, power of attorney, and possibly a health directive) in one place, providing you with certainty should your health change temporarily or permanently.

Second, estate planning helps you transfer your assets in the most tax-efficient manner. This typically includes considering what to do with assets like rental property, small businesses, or corporations. These are assets that, if sold, would trigger significant capital gains tax; probate fees can also be substantial. While such taxes and fees are unavoidable, they may be deferred or lowered by using strategies you can discuss with your financial or tax advisor.

Third, many retirees associate ownership with control, and believe that if they give up ownership, they give up control. With a good estate plan, there are often ways to give up ownership, and yet maintain control. Through the use of trusts or other techniques, you maintain privacy and protect your assets from creditors, all while having your assets pass to the beneficiaries of your choice.

If you want your assets and your beneficiaries to be protected when you are no longer able to do so, you should have an estate plan in place. Otherwise, the courts and the Canada Revenue Agency may be making the decisions for you.


The information contained herein has been provided by FiduSure Financial Inc. and is for information purposes only. The information has been drawn from sources believed to be reliable. Where such statements are based in whole or in part on information provided by third parties, they are not guaranteed to be accurate or complete. The information does not provide financial, legal, tax, or investment advice. Investment, trading, or tax strategies should be evaluated relative to each individual’s objectives and risk tolerance. Carte Risk Management Inc., Carte Financial Group and its affiliates and related entities are not liable for any errors or omissions in the information or for any loss or damage suffered.

Subject to any applicable death and maturity guarantee, any part of the premium or other amount that is allocated to a segregated fund is invested at the risk of the contract holder and may increase or decrease in value according to fluctuations in the market value of the assets in the segregated fund. A nominee account is one in which an investment is held in trust for an individual by a corporation or entity other than the individual. A segregated fund policy held within a self-directed plan is one example of investing in a nominee account. A segregated fund held in a nominee account may not offer creditor protection. Please read your Information Folder carefully and seek professional advice before investing. Commissions, trailing commissions, management fees and expenses may be associated with your insurance contract.

This material is intended for education and training purposes only and is not intended to be, nor should it be construed as, an offer or solicitation for the purchase or sales of any specific securities, financial services or other non-specified item. Securities products are sold by prospectuses that contain more information about the product’s fees, charges and limitations, and can only be offered by a qualified registered representative. This is a hypothetical scenario for illustration purposes only and does not present an actual investment for any specific product or service. There is no assurance that these results can or will be achieved.

All figures are for illustrative purposes only and do not reflect an actual investment in any product, nor do they reflect the performance risks, expenses or charges associated with any actual investment. Past performance is not an indication of future performance. Actual results may vary substantially from the figures in the example. All rates of return are hypothetical and are not a guarantee of future performance of any asset, including insurance or other financial products. Higher rates of return have been associated with higher volatility. All inflation rates and rates of return on current financial holdings are estimates provided by the client. Tax and/or legal advice is not offered by FiduSure Financial Inc. or its partners. Please consult with your personal tax professional or legal advisor for further guidance on tax or legal matters.

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