‘Living the Dream’

For those that do not know me that well, I love sports.   Last year, I had an opportunity to live out a dream of mine, which was to play an actual baseball game at the Skydome (now Rogers Centre). Growing up, players imagined hitting a game winning home run and I was no different and now I had my chance. I was ‘living the dream’, sitting in the dugout where Jose Bautista sat just a few hours earlier, taking a couple of practice cuts in the tunnel and blowing a kiss to my wife and son while in the on deck circle.  Just before my first at bat I became very anxious,  there I was standing in the batter’s box, and here comes the first pitch, ‘strike’! Ok, no problem, a few more pitches, and it’s now a full count, all the while, I never swung my bat.   As the deciding pitch was delivered, I watched it as it was in my opinion a ball but no matter, the umpire rung me out.   After all that time, I watched all the pitches go by and my bat never left my shoulder.

I was in shock, as I sat in the dugout, I laughed to myself and thought that I can’t believe one of my ‘life bucket’ moments, I did nothing.   As the game went through, it became apparent that I may not get another at bat, but somehow, I was able to get another chance. I recall telling myself, ‘I am lucky to get another chance, no way am I leaving the bat on my shoulders this time!’   As you see on the image of this blog (fans are photoshopped!), I did in fact swing and just narrowly missed hitting a home run, but where this story ends and our blog message begins is that you can never take things for granted and when you get an opportunity, you must seize the moment, much like how each of you started your own business

For many business owners, transitioning into retirement can be a complicated process. You have the additional considerations of not only monitoring your personal investments (such as RRSP, TFSA, LIRA, etc.), but also the assets still held inside your corporation. You may be asking, ‘What will I do now? Did I save enough? Did I plan well enough to live the life I want in retirement?

In regards to ‘retirement readiness’, we always believe of living within your means, and that is where an Individual Pension Plan (or IPP) can complement a business owner’s investment portfolio. An IPP acts very much like a defined benefit plan. IPPs offer personalized features for retirement combined with greater retirement savings for company owners and greater tax deductions for the company with the following key benefits:

• Higher maximum annual contributions

• Guaranteed funding- IPPs minimize market risk by placing an assumption that the plan will grow at 7.5% annually.  After each 3 year valuation period, if the plan has grown less than 7.5%, the company can ‘top up’ the plan by transferring money out of the corporation on a tax-free basis

• Defined retirement income stream-  Pre-determined retirement income for life which is also indexed for inflation

• Creditor proofing- 100 percent creditor protection of assets

• Estate planning- The possibility exists to move plan assets to the next generation

• Tax deductible features-  Tax deductions on contributions for previous year’s earnings, in addition, all the expenses associated with an IPP are tax deductible to the corporation, including investment costs on the IPP assets and the Additional Voluntary Account

Also note that when you sell your business, you may either maintain the IPP or to close it, in both cases it will stay with you and not the purchaser.  The IPP can be a very useful strategy to get money out of the corporation tax free and significantly boost your retirement fund.

We have been fortunate enough to work with great partners within our professional network and one such partner, Michelle Dickinson of DickinsonCarr, specializes in customized retirement solutions for business owners. If you would like more information about IPP plans, please feel free to contact us for more details.

For those business owners looking to retire in the next 10-15 years, while still drawing more than $100,000 per year after expenses, this might be the perfect time to take advantage of this opportunity that currently presents itself to you right now.

An IPP may not be for everyone, but until you explore this option and see how it fits your situation, you do not want to miss out because you ‘left the bat on your shoulder’.