New Year’s Financial Checklist

As we enter a New Year and decade, this presents an opportune time to ensure your financial affairs are in good order. From adjusting RRSP contributions to reviewing your beneficiaries on your life insurance policies, please find checklist below:

  1. Prepare Your Will or Make Sure it is Up to Date – If you have procrastinated having a Will prepared, now is a great time to find a local Wills and Estate lawyer. If you already have a Will in place, ensure it is up to date.
  2. Take Advantage of Your Company Benefits – If you are lucky enough to work for an employer with benefits are you optimizing what is being offered? Many employees who have extended health insurance coverage, fail to take advantage of what is being offered. From vision care or routine dental to registered specialists and therapists, make sure you know what you qualify for and utilize your benefits as required.
  3. Take Advantage of Your Company Match Programs – Does your company offer a match program on your RRSP contributions? Are you optimizing the contribution? Take advantage by ensuring you are maximizing your contributions. Furthermore, if you work for a company which has an Employee Stock Ownership Plan (ESOP) make sure you take advantage.
  4. Increase your RRSP, TFSA and Non-registered contributions – outside of company contributions, if you are systematically contributing to your investment accounts, make sure to keep up with inflation by increasing your contribution. Note the cumulative limit on Tax Free Savings Accounts is $69,500 since 2009 and will be $6000 in 2020. Furthermore, the RRSP deduction limit for 2020 is $27,230 (for 2019 it was $26,500) or 18% of income (whatever is less). In the case where you have typically done lump sum contributions, consider a systematic contribution plan which can lower market volatility through dollar cost averaging.
  5. Contribute lump sum to RRSP before the deadline – If you have opted to do yearly lump sum contributions to your RRSP, ensure you make a contribution before this year’s deadline on March 2, 2020. Have you considered a RRSP catch-up loan which will allow you to borrow to make a lump sum contribution to reduce your 2019 tax liability?
  6. Review your portfolio allocation – with the 2019 year continuing what has been a record bull run, it is a good time to review your current portfolio to ensure it meets your financial objectives. Whether that be reducing exposure to certain asset classes or leaving current holdings status quo, the new year presents a good time to ensure your asset mix meets your current financial goals.
  7. Review your life, critical illness and disability insurance policies – Evaluate your insurance needs by ensuring you have the correct amount of insurance for your current needs. In case of premature death, will all your debts be covered and will there be adequate income replacement? Do you have a term policy coming up for renewal which should either be extended or converted to a permanent insurance policy? Have you put a term policy in the last 10 years? Due to insurance rates dropping on term insurance policies have you compared to a current dated policy to compare? In case of accident or sickness do you have enough coverage or assets to cover an extended period of time without income? Are you prepared in case of sickness to cover expenses related to out of pocket expenses such as medicine not covered by the provincial government or your group benefits?
  8. Compare your mortgage rates to current market conditions – Did you do a variable rate mortgage in the last 5 years? Have you compared to current rates where often variable rates have dropped significantly? Do you have an upcoming mortgage renewal on fixed rates? Have you compared to current solutions? Do you have a debt to consolidate, renovations to complete or would like to ease your cash flow? Have you considered a refinance?
  9. Elect to take your Canada Pension Plan (CPP) or Old Age Security Benefit (OAS) – are you 60 or older or approaching 60 and want to know how much you will qualify for or the ramifications of taking your CPP or OAS early or delaying for future years? Even for those much younger, sign up on the Service Canada website for projections on future benefits.
  10. Is your net worth growing – Are your debts increasing, but your assets not? Subtract your debts from the value of your assets. If your net worth decreased due to a variation in asset values (due to markets falling for example) this not necessarily an area of concern. However if your debts continue to increase and your net worth has actually fallen or stayed stagnant it would be a good time to do a cash flow analysis and re-evaluate.

Furthermore, are there any other major life changes which warrant a change – have you gotten married, changed jobs, bought a house, had kids or any other major life change? Perhaps you need to open a Registered Educations Savings Plan (RESP) for a new born child or got a new job which allows you to pay down more of your mortgage. Whatever the life change, take this opportunity to evaluate what changes may be necessary.

We would be happy to provide further analysis for your specific circumstances. Contact Protect Your Wealth today to learn more!

We proudly service life insurance clients in Ancaster, Burlington, Dundas, Hamilton, Oakville, Waterdown and the surrounding areas.