The WC is an indicator of health risk that is associated with abdominal obesity. There are greater health risks associated with excess fat around the waist and upper body (also recognized as an ‘apple’ body shape) than with excess fat located in the hips and thighs areas (also recognized as a ‘pear’ body shape).A WC measurement of 102 cm. or more in the male population, and a measurement of 88 cm. or more in the female population is associated with the increased risk of Type 2 diabetes, coronary heart disease as well as high blood pressure.

Other health conditions can interact with obesity that greatly elevates the risk of developing a wide range of chronic health issues. Age and family medical history as well as other health conditions such as high cholesterol, high blood pressure and/or high blood sugar levels combined with obesity all increase the likelihood of developing more serious diseases and/or medical conditions. Lifestyle choices such as poor eating habits, lack of physical activity and/or smoking not only increase the risks of chronic health problems, but actually exacerbate the burden on the individual’s health.

Achieving as well as maintaining a healthy body weight is essential for good health. Healthy body weight is usually achieved through healthy eating as well as regular physical exercise. Some helpful ways to help control body weight are:

• Find a way to incorporate regular physical activity into your daily routine. This can be achieved by such simple things as talking a walk during your lunch break, using stairs instead of the elevator, etc. Splitting up exercise time into shorter sessions starting with 10 minutes of activity 3 times a day may be easier to incorporate into your schedule. Set up an exercise routine that you can maintain; sporadically going to the gym is not going to give you the desired results.
• Make your meal portions smaller. Many times people are not aware of how much they eat and how many calories they consume because they think they are eating a regular sized portion. Start serving smaller portions; those who are still hungry can always have ‘seconds’. Avoid eating out in establishments that offer ‘all you can eat’ and/or restaurants that serve very large portions. As alcoholic and other sweetened beverages are high in calories avoid them and substitute instead non-sweetened beverages.
• Eat a nutritionally balanced diet. Pay attention to the labels on food products, many times what we think are low-fat and low in calories actually isn’t.

Remember that life and health insurance premiums are based on health status. Obesity, like smoking, lowers your health status meaning you may be paying higher rates. If you are obese, and have lost the weight, consult with your life insurance broker about this new development in your health status, you may be eligible for a reduction in your rates.

One of the longest ongoing health studies in the United States claims that obesity is now a bigger overall threat to adults’ health than smoking cigarettes. The study, which is conducted by researchers from Columbia University and the City College of New York, claims that obesity causes just as much, and possibly even more diseases than tobacco consumption. While smoking rates are starting to actually decline, obesity shortens the lifespan. While smoking generally impacts health in such ways as heart disease and/or cancer, the impacts of obesity are much larger.

The study was conducted over a period of fifteen years, and involved interviewing more than 3.5 million people. The study calculated the number of ‘quality adjusted life years’ (QALYs) that were lost due to obesity and smoking. Quality adjusted life years are a measurement of the quality as well as the quantity of a lived life; it assigns higher scores for good and/or perfect health and lower scores for illness, injury and/or death. The study showed that between 1993 to 2008 smoking in the American adult population decreased by 18.5%; meanwhile the proportion of obese American adults increased by 85%. There is no valid reasoning to suggest that these figures are not mirrored in the Canadian population. Statistics Canada has reported that two out of every 3 Canadian adults is either overweight and/or obese.

Obesity can cause such complex health problems such as:

• Type 2 diabetes;
• Liver disease;
• Coronary heart disease;
• Sleep apnea and/or other respiratory issues;
• Joint issues, resulting in joint replacements;
• Hypertension and/or high blood pressure;
• Stroke;
• Gallbladder disease;
• Osteoarthritis;
• Cancers such as breast cancer, colon and endometrial cancer;
• Mental health issues such as low self-esteem and/or depression.

Health professionals assess a person’s weight status by using 2 tools, the body mass index (BMI) and waist circumference (WC). These tools are used on all adults 18 years of age and older, with the exception of pregnant and/or breastfeeding women. The BMI is calculated on a weight-to-height ratio. Rather than directly measure the amount of body fat in the individual, it is an indicator of the health risks that are associated with being either under or over weight. In the Canadian weight classification system, there are four categories of BMI:

• Underweight (less than 18.5);
• Normal weight (between 18.5 and 24.9);
• Overweight (between 25 and 29.9);
• Obese (30 and over).

This article will be continues in Part II.

As the economy is still dramatically fluctuating, people are now looking at ways to save money. It has been confirmed that the last three months of 2008 Canada did indeed experience a recession, and continues to do so. However, it is important for Canadians to ensure that short-term savings do not impact long-term financial goals and protection.

Some people may find it tempting to cancel their life insurance coverage in order to save on paying the premiums. This 'solution' however can lead to financial consequences later on. Should your health status change, you may find that in the future premiums will be more expensive, and can potentially cost more than what was initially saved; especially for those who purchased their coverage when they had excellent health status.

Financial protection, especially in regards to the wage-earners in the family are even more essential now. Should an unexpected death occur, it is important to have coverage in order to cover not only the funeral expenses, but to make sure that the family has enough money for living expenses, paying off debt, etc. For families with children, the remaining parent may want to take an extended leave from their employment, as well as have the financial resources to pay for additional expenses such as childcare, nanny, etc.

Health insurance is also a wise financial move at the current time. Sudden expenses, i.e. prescription medications, can quickly add up. This total amount per month can easily exceed your premiums, especially with the high prescription costs in some provinces. This coverage is also contingent on health status as well; should a health problem occur you may not be entitled to the same premiums as you once were should you cancel your existing coverage.

For Canadians who insure their mortgage through the lender, consider using term life insurance instead. Choose a term life policy that is compatible with the amount of time that is owed on your mortgage. Not only is this generally a less costly expense, but it offers added benefits. Most mortgage insurance policies only cover the existing balance that is owed; a term life policy retains its full value throughout the duration. Term life also gives the financial control to the policy owner; mortgage insurance is only used to pay off the mortgage should the mortgagee die. Term life offers the beneficiary full control of the money; this can be used to pay off the mortgage, pay off other debts, etc. Especially at a time of need, this flexibility can be essential. There is term life policies that can be converted into whole life insurance once the term has expired, thereby giving the policy holder continuing protection. Many of these policies do not require a new medical questionnaire to be filled out; therefore the rates will be consistent with the health status provided originally. This can be a great way to not only save money at the present time, but also in the future when the rates will possibly be higher.

Go through your monthly budget carefully when decided when and/or where to economize. Any items that are essential to your financial security and well-being should not be cut from your budget if at all possible; try and find other ways to save money. This can include not spending as much on items such as entertainment, clothing, vacations, etc. which, while possible causing inconvenience, will not impact your long-term goals.

Canadian charities are facing a reduction in charitable donations due to the global financial crisis. An open letter was sent to the Prime Minister as well as the Finance Minister that was published in Canadian newspapers. The letter asked for tax breaks for corporate as well individual donations in order to increase charitable giving for Canadian charities.

Under the current laws, individuals and/or corporations can donate shares of publicly traded companies and do not have to pay the capital gains tax. The open letter asked for this same exemption for donations of private company shares as well as real estate. This would put Canada in the same playing field as the United States, and is expected to dramatically increase charitable donations. Currently a tax receipt is issued for donations of real estate and private shares, but a capital gains tax still must be paid on these types of donations.

Donating to charity is not only a great way to help the community, but also for financial planning due to the tax credits. In order to benefit from the tax credits, donors are required to donate to a registered charity. Currently qualified donees include:

• Registered Canadian charities;
• Registered Canadian amateur athletic associations;
• Prescribed universities outside of Canada;
• Charitable organizations outside of Canada that the Government of Canada has made a donation to in the current or previous tax year;
• The Government of Canada, a province, and/or a territory;
• Tax-exempt Canadian housing corporations that provide only low-cost housing for seniors;
• Municipal and/or public bodies that perform a function of government in Canada;
• The United Nations and its agencies.

Donations made to a registered charity do not have to be claimed in the current year, but can be used on any tax return for any of the next five years. Donations can only be claimed once. Tax credits that are carried forward from a previous year must be used before tax credits for gifts in the current year can be applied. When claiming a donation from a previous year, a note should be attached to the return indicating the year in which the receipt was submitted, as well as the portion of the eligible amount you are claiming for the current year and the amount that will be carried forward. Receipts can also be combined with those of a person's spouse/common-law partner and be claimed together on one tax return that will allow for the highest tax credit rate.

Currently, the first $200 that is donated is eligible for a federal tax credit of 15% of the amount donated. For amounts after the initial $200, the federal tax credit is increased to 29% of the remainder. All or a part of this amount is eligible generally up to 75% of the net income. Provincial tax credits are also available; these will vary among the provinces.

For those Canadians who wish to donate to charity and claim the tax credits, only donations made to a registered charity will be allowed. A list of registered charities can be found at the Canada Revenue Agency website. This also provides information regarding any charity that has had their status revoked, as well as new charities that have been registered within the past year. Life insurance policies can also be used to donate to charity, as well as property/cash gifts. When using a policy to donate the donor can either gift the ownership of an existing policy or allow the charity to take out a policy on the donor's life. In either circumstance the charity becomes the legal owner of the policy. When gifting an existing policy, the cash surrender value minus any outstanding policy loans plus any accumulated dividends and/or interest will be considered the fair market value. This amount will then be eligible for a tax receipt. If the donor pays the premiums for a policy in which the charity is the beneficiary, these payments are considered a charitable donation and can be issued a tax receipt yearly for the premiums paid. For more information regarding this charitable donation option, visit Life-Quotes.ca

Life-Quotes.ca published a blog in November regarding the new Tax-Free Savings Accounts that are now available to Canadians. The initial blog gave general information regarding this subject; this blog is intended to provide more detailed information.

The Tax-Free Savings Account (TFSA) gives Canadians more choice in how they wish to accumulate savings, retirement assets, etc. It allows all Canadians over the age of 18 to contribute initially $5000.00 per year into this account; this amount will increase in increments of $500.00 per year as inflation grows. The income derived from this account is exempt from taxation, including withdrawals; however there is no tax deduction available for deposits made to the account. Any withdrawals can later be replenished to the account without affecting that particular year's allowance.

This new type of account offers several advantages. As there is no taxable liability, 'income' taken from this plan does not increase your marginal tax rate. It also allows for long term financial planning; and as the added cash flow doesn't affect taxable income it can increase the after tax income you receive from other taxable plans, i.e. RRIFs. The TFSA can be a very effective estate planning tool as well as there is no taxable liability. While the language of the plan is somewhat unclear, it does suggest that there will be no tax on any income/gains accrued up until death.

The TFSA is almost as successful as an RRSP when used as a wealth accumulation tool. When the taxation is factored in, money saved in the TFSA is comparable to the RRSP due to the tax rates that are involved when withdrawing funds from the RRSP. As well, RRSPs can create other 'costs', i.e. loss of tax credits. As well, taxes can be higher on RRSP income due to the triggering of OAS when the minimum withdrawals are mandated. The total amount accumulated will be dependent on the tax rates that are applicable to withdrawing the funds from the RRSP; the TFSA does not incur any taxation costs upon withdrawal.

For Canadians who are trying to save money while earning a lower income, the TFSA can actually be more advantageous than an RRSP. The advantage of the RRSP deduction is reduced by the lower tax rates that this income bracket would pay. For people who will more than likely be earning more in their future, the TFSA can be a better financial planning tool and the RRSP room can be carried forward for future deductions at higher tax rates. For Canadians who are saving for their retirement, the TFSA has the advantage of allowing the individual to avoid the withdrawal penalties. Most people end up having to take more income from their RRIF due to the legislated minimums; the TFSA can be used as a way to continue to save these excess proceeds from future tax penalties, and does not affect any income-tested tax benefits.

The TFSA can be a great financial tool when it comes to financial planning for their child(ren). The parents can fund more of the education for the child with the agreement that the child save an equivalent amount in their TFSA. This allows the parents to benefit from the tax deductions and credits for funding their child’s education and benefits the child as they will begin to accumulate savings. As the majority of students are lower-income their contribution towards the TFSA comes with a very low after-tax cost and enables them to begin saving towards purchasing a home, starting a business, etc.

The TFSA gives all Canadians another tool when in regards to their financial planning needs. Alone, or combined with other saving strategies, this type of account can help Canadians save more money, especially when it comes to the amount of taxable income. It also allows for a more comprehensive saving strategy for those who are not only planning for retirement, but for other major financial transactions. When it comes to retirement planning, it's always a wise idea to ensure that your life insurance coverage is suitable for your estate planning needs.

The government of Ontario has launched a $1.1 billion over four year plan that is designed to help seniors reside in their own homes. The initiative was started at the end of August, 2007 and will help match the needs of seniors and their caregivers access the local support services they require to maintain their independence. The Aging at Home Strategy hopes to develop new ways to provide supports and/or services that ensure seniors can spend their final years living where and how they wish to.

The stated goals of the Aging at Home Strategy are:

• To ensure that seniors home support them;
• To ensure that seniors have supportive social environments;
• To ensure easy accessibility to senior-centered care;
• To identify innovative solutions to ensure that seniors are and stay healthy.

The Aging at Home Strategy will increase traditional services that enable seniors to be healthy and live independently in their homes such as:

• Community support services;
• Home care;
• Assistive devices;
• Assisted living services, supportive housing;
• Long-term care beds;
• End-of-life care.

This new approach will combine traditional services that are currently offered with new services that will be provided by Local Health Integration Networks (LHINs) on a community-based level. Each LHIN will be required to allocate a minimum of 20% of the funding throughout the first three years in order to deliver innovative care for seniors. Innovation proposals must be either evidence-based and/or build in an evaluation component if previously untested. Ultimately the goal is for LHINs to assume more responsibility for the planning, managing and funding of senior healthcare services at a local level. Support at the local level is intended to help seniors, especially those with chronic health issues, remain living at home, avoid unnecessary hospital emergency room visits and as well as avoid/delay admission to a Long Term Care facility.

This program is targeted for seniors who are living with age-related health conditions and/or age-related disabilities. Consideration will also be given to services, programs and/or supports that allow the family, friends as well as neighbors to help care for seniors in their community. The strategy will be based on the senior population of the community in Ontario; therefore services will vary depending on where the senior resides. Funding for each LHIN will be allocated on estimates of the basis of age, gender, socio-economic status and rural geography and health status in order to estimate the demand for services. The funding will also depend on the estimated population growth as well as the type of seniors who live in a specific LHIN territory and the current service level that is already in place.

For more information regarding this initiative please visit the Ministry of Health and Long-Term Care.

The Wage Earner Protection Program (WEPP) is offered to eligible Canadians by Service Canada on behalf of the Labour Program. The purpose of WEPP is to reimburse workers for any unpaid wages as well as vacation pay that is owed to them but has not been paid due to the employer declaring bankruptcy and/or is subject to receivership. This program does not cover severance pay, termination pay, and/or any other employee benefits. The maximum payment is four times the Employment Insurance weekly average wage, less any amounts that are prescribed by regulations.

Applications for WEPP must be submitted within 56 days of the date of bankruptcy or receivership to Service Canada. This payment is taxable; a T4A slip will be issued on or before the last day of February the year following the payment. When WEPP is added to the Income Tax Act, the applicable tax will be deducted at the source. Eligibility for WEPP includes:

• If your former employer filed for bankruptcy or is subject to receivership on or after July 7, 2008.
• You are owed wages by your former employer which was earned during six months preceding the date of  bankruptcy/receivership.
• A trustee or receiver has been appointed to administer the former employer's bankruptcy/receivership.
• You have stopped working for a period of 7 consecutive days for your bankrupt/insolvent employer.

Please note that you are not eligible for WEPP if your employer has not declared bankruptcy. Other criteria that may make you ineligible for this benefit are:

• If you were an officer or director of the former employer.
• If you had a controlling interest in the now bankrupt business.
• You were a manager in which your duties included making financial decisions that impacted the business and/or made binding financial decisions regarding the payment or non-payment of wages.

If you are related to the now bankrupt employer, you may still be eligible for this benefit. You will be required to fill out the WEPP Supplementary Form (Additional Information Regarding Your Relationship to Your Employer) in addition to your application. This will help determine whether or not you were treated in the same manner as the other employees despite your familial relationship to the owner. You may also be eligible if you are currently working for the receiver/trustee as long as your employment was terminated for 7 consecutive days by the former employer and no wages were earned during that time period. If you have only been partially compensated for your wages and/or vacation pay you are still eligible for the outstanding amount owed.

If you are collecting Employment Insurance benefits, you must report the receipt of your WEPP payment. Any outstanding owed monies that were not paid under WEPP can still be pursued under the regular bankruptcy process. You will need to contact the trustee/receiver for more information on pursuing this action.

You will need to have a copy of the information that is provided to Service Canada by the trustee or receiver appointed in your employer's bankruptcy/receivership before applying for this benefit. This information, along with your application, will determine your eligibility as well as your payment. If your employer has declared bankruptcy, you must contact the trustee to file a proof of claim. This proof of claim is essential in order to process your WEPP application. You also may be entitled to compensation beyond the limits of what can be paid under the WEPP.

For more information about the Wage Earner Protection Program, please visit Service Canada.

Starting in 2009, Canadians will be able to contribute their money into a tax-free savings account. This type of account will be available to all Canadians age 18 and over (19 in some provinces where 19 is the age of majority) who have a Social Insurance Number. A tax-free savings account (TSFA) can be a great addition to retirement planning as well as other financial planning needs. Due to the flexible nature of the account it can be used for all savings purposes.

The new tax-free savings account offers several advantages to Canadian residents. As much as five thousand dollars can be contributed annually (this amount will increase with inflation throughout the years in $500 increments), and any unused room can be carried forward if the maximum contribution is not met. Withdrawals are tax-free as well as creating future contribution opportunities. While contributions are not deductible, capital gains as well as other investment income that is earned in the TSFA are not subject to taxation. As well, any income earned as a result of this account and/or withdrawals will affect the person's eligibility for federal income-tested benefits and/or credits. Contributions to a spouse's (including common-law) TFSA are allowed; assets are transferable to the account upon the death of the spouse.

The TFSA will be a great savings tool for seniors and those who are planning for retirement. TFSAs provide more financial flexibility, as withdrawals are not subject to taxation (i.e. RRSPs). As circumstances can quickly change in a person's life, having financial options that come without being 'penalized' can provide more options that will not have a negative impact on locked-in financial assets. Along with other retirement savings plans, the TFSA will be a great addition for this goal.

The TSFA will be available starting in 2009 at most financial institutions; discuss with your financial advisor/banker when this will be available for you. It’s a wise idea to research all of your retirement savings options, including the type and/or amount of your life insurance.

Canada Savings Bonds are an option for Canadians looking for investment options. These bonds are issued by the Government of Canada and can be a safe and secure addition to your investment portfolio. Canada Savings Bonds (CSBs) and the Canada Premium Bond (CPBs) both offer a variety of features.

Canada Savings Bonds can be cashed in anytime of the year; the Premium Bonds can only be cashed in once a year. Both types of bonds are backed by the Government of Canada which makes both types of bonds more safe and secure for investors. These bonds are available for purchase for six months per year, beginning in early October until April 1. Be advised however, that the Minister of Finance has the ability to end the sales of these bonds at any time.

CSBs and CPBs are available in either:

Regular Interest Bonds:   These bonds earn simple interest at the rates which are determined by the Minister of Finance until the earlier of maturity and redemption. The simple interest is paid to the bond's owner on each annual anniversary until maturity, or at the time of redemption.

Compound Interest Bonds:   These earn compound interest as well as simple interest. The compound interest rates are determined by the Minister of Finance until the earlier of either maturity or redemption based on the earned interest on each annual anniversary of the issue date prior to maturity. Compound interest is payable at the time of redemption.

Compound interest CSBs may be exchanged at any time before maturity for the same denomination in regular interest CSBs of the same series. Payment of interest as well as compound interest CPBs may be exchanged for the same denomination in regular interest bonds of the same series plus payment of earned interest. Prior to 10 months of their issue date, regular interest CSBs can be exchanged for compound interest CSBs of the same series; regular interest CPBs may also be exchanged for the same denomination in compound interest CPBs of the same series.

The ownership of bonds can be transferred in certain situations, such as:

• Name change due to divorce, marriage, adoption and legal name change.
• To a beneficiary due to the death of the registered owner.
• If the registered owner has a spouse, or the bonds are owned/held by spouses, in the event of divorce; they can also be   stipulated in the written separation agreement in a form that is acceptable to the Bank of Canada.
• If transferred to the Canada Retirement Savings Plan and/or to the Canada Retirement Plan.

Additional names may be added as co-owner with the right of survivorship; the Bank of Canada must be notified via completion of the prescribed forms. Be advised that the term 'surviving co-owner' is not valid or applicable in Quebec; transferring ownership must apply to specific provincial laws.

Canada Savings Bonds may be redeemed by the lawful owner at any time. This can be accomplished by contacting any authorized sales agent in Canada; proper identification must be presented. CPBs may be redeemed either on the annual anniversary of the issue date or within 30 days afterwards. If the CPB is cashed in within the 30 day period no interest will be earned for the following period of the anniversary date. CPBs may be redeemed at other times under the following circumstances:

• Death of the lawful owner.
• Court order.
• Redemption proceeds are required by the lawful owner for the purposes of:
    To avoid bankruptcy.
    To be used to purchase a home using the Home Buyer’s Plan.
    To be used in furtherance of pursuing education via the Lifelong Learning Plan.

If bonds are redeemed within the first 3 months after their issue date, no interest is earned on them. As well, no interest is earned on bonds for the calendar month in which they are redeemed.

Bonds may only be purchased with Canadian currency and can only be owned by legal Canadian residents. More detailed information can be found at http://www.csb.gc.ca/eng/bonds_cpb.asp

The final installment in this 3 part series will focus on the Canadian Pension Plan Survivor Benefits. These benefits are paid to a deceased contributor's estate, surviving spouse or common-law partner and dependent children. There are three types of benefits:

• The death benefit. This is a one-time payment to, or on behalf of, the estate of the deceased CPP contributor;
• The survivor's pension. This is a monthly pension paid to the surviving spouse/common-law partner of the deceased contributor.
• The children's benefit. This is a monthly benefit paid for dependent children of the deceased contributor.

It is very important that these benefits be applied for; if they haven't been applied for you may lose benefits that are you are entitled to. In order for your survivors to be entitled to benefits there is a minimum contributory requirement of at least 3 years. If your Canada Pension Plan "contributory period" is longer than nine years, you must have contributed in:

• one third of the calendar years in your contributory period, or
• 10 calendar years, whichever is less

The Canadian Pension Plan death benefit

This is a one-time, lump-sum payment made to the estate of the deceased contributor. If there is no estate, then eligibility for this payment are as follows:

1. Person who is responsible for the funeral expenses.
2. The surviving spouse, common-law partner or next of kin may be eligible, in that order.

The amount of the death benefit will depend on how much and how long the deceased person contributed into the Canadian Pension Plan. The dollar amount is calculated by what the retirement pension would have been if the deceased had been 65 when death occurred; the benefit is equal to 6 months of this pension, up to a maximum of $2500.

The Canadian Pension Plan survivor's pension

The surviving legal spouse or common-law partner of a deceased contributor to the Canadian Pension Plan qualifies for this benefit. A person who is still a legal spouse but is separated at time of death may still be eligible if there is no current common-law partner. The amount the surviving spouse will receive depends on:

• Whether or not the spouse/common-law partner is also receiving a Canadian Pension Plan disability or retirement pension.
• How much, and how long the contributor paid into the plan.
• The age of the spouse/common-law partner when the contributor died.

CPP will first calculate how much the contributor's retirement pension is, or would have been, if he/she had been 65 when they died. A further calculation is then done based on the survivor's age at the time of the contributor's death. If the surviving spouse is:

• Aged 65 and over they will receive 60% of the contributor's retirement pension, if they are not receiving any other Canadian Pension Plan benefits.
• Aged 46-64, or under age 45 and disabled, or raising a dependent child, they will receive a flat rate plus 37.5% of the contributor's pension if they are not receiving any other Canadian Pension Plan benefits.
• Under the age of 45 and not disabled and not raising a dependent child, they will receive as above, but minus 1/120 for each month the spouse/common-law partner is under the age of 45 at the time of the contributor's death.
• Under the age of 35 and not disabled and not raising a dependent child, they will not be paid until they reach the age of 65, or become disabled.

The Canadian Pension Plan children's benefit

If a child has lost at least one parent who was a Canadian Pension Plan contributor, they may qualify for a benefit, provided that the deceased parent has met the contributory requirements. This benefit is paid as a flat rate that will be adjusted annually. If both parents are deceased and/or disabled and paid into the Canadian Pension Plan for the minimum amount of years, the child may qualify for 2 benefits. For children under the age of 18 this benefit is generally paid to the person that the child is living with. For children 18 years of age and older who are attending school fulltime (this includes college and university) the benefit will be directly paid to the child upon his/her application.

The Canada Pension Plan (CPP) is designed to provide basic benefits for contributors who retire or who become disabled. It is a taxable monthly benefit is paid to those who have contributed to the plan; it is based on how much and how long a person contributed to the plan as well as the age of retirement. Its function is to replace approximately 25% of the earning's of which the person's contributions are based.

Canadian Pension Plan offers 3 kinds of benefits:

• Retirement pension
• Disability benefits for contributors with a disability and their dependent children
• Survivor benefits which include the death benefit, the survivor’s pension and the children’s benefit

Retirement Pension

Qualification for CPP benefits requires at least one valid contribution to the Plan as well as:

• The applicant is at least 65 or
• The applicant is between 60 and 64 and meets the earning requirements

If the applicant is between the ages of 60 and 64 they must do one of the following in order to qualify for benefits:

• Stop working or
• Earn less than the specified amount ($884.58 for the 2008 year) the month preceding and the month following the month your pension begins.

Once pension benefits are received the applicant can work on an unlimited basis, however no more contributions to CPP will be eligible.

The age in which a person decides to take their Canadian Pension Plan determines the amount they will receive. The pension usually begins the month after the contributor turns 65. If you choose to receive this pension earlier than 65, the monthly payment will be smaller, if you choose to receive this pension later than 65 up to the age of 70 the monthly payment will be larger. The amount is adjusted 0.5% for each month before or after your 65th birthday from the time you begin to receive your benefits; this adjustment is permanent so if you choose to apply for your pension early the payments will not increase when you turn 65.

Several factors to consider regarding when to take your retirement pension are:

• Whether or not you are still working and contributing to the Plan
• The length of time in which you have made contributions
• How much you have earned (which may affect how much you’ve contributed)
• How much other retirement income you have
• The type of retirement you plan on having
• Your health

It is possible to get an estimate of your retirement pension at the CPP website. This can help you determine when to apply for retirement benefits, as well as give you an idea of how much you will receive should you apply for your benefits. If you decide to retire, it's best to apply for your Canadian Pension Plan benefits at least 6 months in advance; delay in application may result in lost benefits.

If you apply for your Canadian Pension Plan benefits after the age of 60, but before the age of 65 your pension starts at the latest of these following times:

• the month you specify on your application
• the month you stop working
• the month following your 60th birthday
• when your earnings are less than the allowable maximum pension payment for 2 months in a row

If you apply to begin receiving your benefits before you turn 65 or later you will begin to receive your benefits:

• the month of your 65th birthday
• the month you have specified on your application
• the 11th month prior to the month the CPP receives your application

Disability Benefits

The Canadian Pension Plan Disability Benefits provides a monthly benefit that is taxable to contributors who are disabled and to their dependent children. This benefit includes a fixed amount that everyone receives plus an additional amount that is based on your Canadian Pension Plan contributions during your entire working career; there is a maximum that can be received. Children under the age of 18 as well as children aged 18-25 who are attending school full time also receive a benefit (in 2008 the amount is $208.77); children can only receive this benefit if at least one parent is receiving the CPP disability benefit.

In order to qualify for this disability benefit the applicant must:

• be under 65
• have earned a specified minimum amount and contributed to CPP while working for a minimum amount of years
• have a severe and prolonged disability as defined by CPP legislation

The current legislation defines 'disability' as a physical and/or mental condition that is 'severe and prolonged' that regularly stops the applicant from being able to do any type of work. This relates to full-time, part-time as well as seasonal work; as well the applicant's disability is a long-term condition or is likely to result in death.

If the applicant has not contributed for enough years they may still qualify if:

• they have delayed applying and had enough years of contribution when they first became disabled and have been continuously disabled since then but now do not have enough contributions
• the applicant's CPP contributions were stopped/reduced due to raising children under the age of 7
• the applicant has obtained enough CPP credits from a former spouse/common-law partner through the credit sharing to make them eligible
• the applicant worked in another country in which Canada has a social security agreement and that when added to the CPP contributions equals the minimum requirement
• the applicant was medically incapable of applying

If a person is receiving Canadian Pension Plan disability benefits they will automatically convert into a retirement pension at the age of 65. There is no new application needed; however the retirement pension is usually lower than the disability benefit; applying for OAS benefits at this time is recommended. If the applicant is receiving retirement benefits when their disability benefits is approved CPP will automatically switch the applicant to disability benefits if it is clear that the disability started before the retirement pension began.

The next blog will address the Canada Pension Plan Survivor Benefits and will be posted in the next 2 weeks. For more information regarding disability insurance you can also refer to the information here. You can also visit the Canadian Pension Plan website for more detailed information.

Almost every senior in Canada will apply for their pension and benefits through Canada's Public Pensions. Basic financial assistance is also available to survivors and those who are too disabled too work, as well as their children through these programs. Canada's Public Pensions are delivered through the Old Age Security (OAS) and Canada Pension Plan (CPP). Having an understanding of the different programs as well as rules and regulations can help to determine what you are eligible for, and what will be required in the future.

Old Age Security Program

This is a monthly benefit that most Canadians are eligible for if they are 65 years of age or over and meet the residency requirements. Employment status and history are not factors that determine eligibility. Benefits paid out are subject to federal and provincial taxes; those with higher income will repay part or all of their benefits through this taxation system. Eligibility is determined solely by being 65, residing in Canada for at least 10 years once the age of 18 was reached, and:

• Being a Canadian citizen or legal resident of Canadian as of the day before the approval of the application or;
• If no longer living in Canada, having been a Canadian citizen/legal resident as of the day before they stopped living in Canada.

The amount of benefits received is determined by the length of residency in Canada. Any person who has lived in Canada for a total of at least 40 years after the age of 18 may qualify for full benefits. For those who haven't lived in Canada for at least 40 years since the age of 18, they may still be eligible for a full pension if they were 25 years of age or over on July 1, 1977 as well as:

• Was residing in Canada on July 1, 1977 or
• Was residing in Canada before July 1, 1977 after reaching 18 or
• Was in possession of a valid immigration visa on July 1, 1977

In these cases, the person must have lived in Canada for the 10 years immediately prior the approval of the OAS application. Absences during this 10 year period may be offset if, after reaching age 18, the applicant lived in Canada before these 10 years for a time period sufficient to total three times the length of absence, as well as resided in Canada for at least one year before the application’s approval.

For those whose absence from Canada was due to working abroad for a Canadian employer, i.e. armed forces, banks, this time can be counted as residency. Qualification is based on returning to Canada within 6 months of termination of employment or having turned 65 while still employed. Proof of employment as well as proof of physically returning to Canada must be provided. This provision may also apply to spouses and dependents and Canadians who have been working abroad for international organizations.
For Canadians who do not meet the criteria for a full OAS, they may qualify for a partial pension. This is calculated at the rate of 1/40 of the full monthly pension for each full year lived in Canada after the age of 18. This amount cannot be increased as a result of added years of residence in Canada once it has been approved. However, late applicants for OAS may be eligible to receive retroactive payments for up to 11 months plus the month in which the application was received if all conditions of eligibility have been met. If clients cancel their OAS benefits and later wish to have them reinstated, they are not entitled to any retroactive payments.

Guaranteed Income Supplement

The GIS is intended for Canadians who are receiving a basic, partial or full OAS pension and have little and/or no other income. These supplemental payments may start in the same month as the OAS payments, but must be re-applied for every year or by filing an income tax return by April 30. As this supplement is based on income, it will increase or decrease yearly depending on any changes in reported income. Unlike the OAS, the GIS is not subject to income tax. This supplement is not payable outside of Canada for more than 6 months, regardless of previous residential history. Applicants for the GIS must be receiving an OAS pension; there are certain income limits for the applicant as well as spouse/common-law partner. Sponsored immigrants from countries that Canada has agreements with are not eligible for GIS during their sponsorship period (10 year maximum) unless:

• Has resided in Canada for a minimum of 10 years since turning the age of 18 or
• Has resided in Canada as either a Canadian citizen or a permanent resident before or on March 6, 1996 and is eligible for benefits January 1, 2001 or earlier or
• Has been receiving OAS benefits for the month of March 1996 or earlier

The amount of the supplement is based on marital status as well as income. Any other income that the person is receiving i.e. foreign pension, interest, dividends, rental income, wages, worker's compensation payments, etc will be calculated to determine eligibility and/or amount of the benefit. This also applies to any income brought into the family by a spouse/common-law spouse. Income from the previous year is generally used to calculate the benefit for the current year that runs from the current July to the June of the following year. In cases where the applicant has retired and/or incurred loss of pension income an estimate for the current year can be substituted for the income for the preceding year.

The GIS is paid out in 2 basic payment rates: Single (includes widowed, divorced and/or separated people) and Married (where the spouse/common-law spouse doesn't receive either the basic OAS pension or the allowance). Although the supplement rate is higher for single people, each spouse/partner is entitled to benefits; the combined benefits therefore are usually higher than that of a single person. The maximum monthly benefit for a single person will be reduced $1.00 for every $2.00 of other monthly income. If  both spouses/partners are receiving the OAS pension, the monthly payment will be reduced $1.00 for every $4.00 of other monthly income. For a person who is receiving a partial OAS pension, the supplement may be increased by the difference of the partial pension and the full pension. If a spouse is a pensioner but their partner is not receiving either the OAS pension of the Allowance, the pensioner can apply for the Singles rate of the GIS and the supplement will be reduced by only $1.00 for every $4.00 of the combined monthly income. The first $1.00 reduction will be made only when the combined yearly income of both people has reached 12 times the basic OAS pension plus $48.00.

Allowance and Survivor's Allowance

This allowance is paid monthly and includes an allowance for those whose spouse/common-law partner has died. This allowance is designed to help those who are facing financial troubles; i.e. the surviving member of the relationship as well as those couples living on the pension of only one spouse. This allowance must be reapplied for annually and are not considered as income for tax purposes. For people living outside of Canada, this allowance cannot be paid out for more than 6 months, regardless of how long the person initially resided in Canada. The Allowance is paid to the spouse/common-law partner of a OAS pensioner, or to another qualified survivor. The person applying for the Allowance must be between the ages of 60-64 and have been living in Canada for at least 10 years since the age of 18. The applicant must have been a Canadian citizen or legal resident of Canada on the day before the application's approval. To qualify for the Allowance, the annual income of the survivor or the combined yearly income of the couple cannot exceed certain financial limits; these are established quarterly. The Allowance will be discontinued once the recipient becomes eligible for their OAS pension at 65, leaves Canada for a minimum of 6 months, or dies. For couples who receive the Allowance, payments will be discontinued if the pensioner spouse/partner ceases to meet the eligibility requirements for the Guaranteed Income Supplement, or if the couple separates/divorces. The Allowance will also stop if a survivor either remarries or lives in a common-law relationship for a period exceeding 12 months.

A sponsored spouse/common-law partner of an OAS recipient or survivor between 60 and 64 with less than 10 years of residence in Canada after reaching 18 is not eligible for the Allowance for the period of their sponsorship (up to a 10 year maximum), unless:

• Was receiving a pension in or before March 1996 or,
• Was residing or had resided in Canada as a Canadian citizen or permanent resident before March 7, 1996 and will be receiving a pension in or before January 2001

This is an income-tested benefit; the maximum payable amount to the spouse/common-law partner of a pensioner is equal to the combined full OAS pension and the maximum GIS at the married rate. The maximum amount for a person whose spouse/common-law partner has died will be somewhat higher. The maximum monthly Allowance is reduced $3.00 for every $4.00 of the beneficiary’s monthly income for a widowed spouse/common-law partner, or the couple’s combined monthly income. This will happen until the OAS-equivalent is reduced to zero; then for a couple the GIC equivalent of the Allowance portion and the pensioner’s GIC are reduced by $1.00 for every additional $4.00 of their combined monthly income. For survivors, the GIC equivalent portion is reduced $1.00 for every $2.00 of additional monthly income.

In the case of non-sponsored immigrants, the benefit will be prorated. Entitlement will be established at the rate of 1/10th of the benefit for year of residence in Canada after attaining the age of 18; this will be increased an additional 1/10th for every additional year of residence in Canada. This applies for people who haven’t resided in Canada for 10 year after turning 18 and:

• Had/was not residing in Canada as a Canadian citizen or permanent resident before March 7, 1996 or
• Was residing in Canada on or prior to that date as a Canadian citizen or permanent resident but will not be receiving a pension in or before January 2001

Information regarding the Canadian Pension Plan will be featured in the next blog as Part 2 of this article and will be posted in the next 2 weeks.

With many Canadian children entering university or college this September, many parents are concerned about the rising costs of tuition. Even with government grants and/or loans, you may need to help supplement your child's tuition, as well as supplies, housing, etc. Saving for your child's higher education should be a part of your budget in order to have the necessary funds when they are needed. An RESP also allows others to deposit funds into the account, i.e. grandparents, friends, other relatives.
 
One alternative you may want to consider is using a Registered Education Savings Plan (RESP). This is a special savings account that you can set up that has the distinct purpose of saving money for your child's post secondary education. The Government of Canada allows this account to grow tax free until the child (the beneficiary) who is named in the RESP enrolls in their school of choice. Having an RESP also makes you eligible for such incentives like the Canadian Education Savings Grant and the Canada Learning Bond, which are only available to those who have an RESP.
 
An RESP can be opened through most financial institutions such as a bank or credit union. Some certified financial planners as well as group plan dealers may be RESP providers. Remember that some RESP providers may charge for service fees, and/or limit the amount and/or frequency of your contributions. Do some research to find the financial institution that will best suit your specific needs. All that is required to open up an RESP is your social insurance number as well as the social insurance number(s) of the child(ren) who will be benefiting from this plan. You will need to choose the type of RESP that will be the most beneficial for your specific needs. RESPs are available in 3 different types:
 
• Family Plan: This entitles you to name one or more children as the beneficiaries of this plan. A beneficiary must be related to you, but does not necessarily have to be your child; grandchildren and adopted children are also eligible for this program. A family plan will entitle you to name one or all of the children in order for them to be able to use the money while obtaining their post-secondary education. This is a good plan for those who do not wish to make regular monthly payments.
• Individual Plan: This is for one beneficiary only but does not have to be related to you. This plan also doesn't require monthly payments.
• Group Plan: This is administered by a group plan dealer; be advised that each plan will have its own rules. The group plan dealer typically will invest the money in low-risk securities, i.e. bonds, treasury bills and guaranteed income certificates (GICs). You will have to sign a contract agreeing to make regular payments into the plan over a certain time period. The group plan 'pools' your money with those of other participants (beneficiaries) who are of the same age. The total amount of money that each beneficiary gets is based on the amount in the pool, as well as the total number of students who are in school that year. You will be allowed to enter only one child (does not have to be related to you) in a group plan.
 
Once you have selected the type of RESP plan that is best suited for you, ask your RESP provider about all of your investment choices in order to fully understand the advantages and risks of your options. Some providers may offer a variety of investment options; others may already have a set investment plan in place.
 
The benefit of using an RESP is that the money will grow tax-free while it is in the RESP account. Any money that the investment earns will not be taxed until the money has been withdrawn to pay for your child's education. Money that is withdrawn from the RESP to pay tuition is taxed in the hands of the student. As students usually have little or no income, this withdrawal usually will be tax-free. The money that the investment earns while in an RESP will not be taxed until the RESP is closed due to the beneficiary not pursuing a higher education. If the beneficiary decides not to attend college or university, the money that you have contributed will be returned tax-free. The money that the investment earns while in an RESP will not be taxed until the RESP is closed due to the beneficiary not pursuing a higher education.

Statistics Canada is reporting that the rate of Canadians who smoke is on the decline. The highest decrease in smokers comes from the youth population, with teenagers aged 12 to 17 declining 14% in 2000/2001 to 8% in 2005. This decline is surmised to be from the fact that more Canadian teenagers are choosing not to start smoking, with 85% of teens reporting that they have not tried cigarettes. As the majority of smokers begin initially in their teenage years, these statistics are significant. Studies have shown that it is rare for adults to begin smoking if they did not smoke in their teenage years. This is the lowest rate of youth smokers in over 40 years in Canada.

Overall, the percentage of Canadian smokers age 12 and over has decreased from 23% to 22% since 2003. Canadian smokers are also reporting smoking less than previously as well. Canadians smoked an average of 13.1 cigarettes a day in 2003; the average in 2005 went down to 12.7 per day. The amount of non-smokers who are being exposed to second hand smoke is also decreasing, except for the youth population. While statistics show that fewer young Canadians even try smoking, they are more at risk of being exposed to second hand smoke. This is usually a result of being exposed to second hand smoke either in their homes and/or cars, or in public places that teens tend to gather at.

Smoking habits are also changing in Canada. More homes are now smoke-free, thereby reducing the number of people exposed to second hand smoke. In 2003 57% of Canadian homes did not allow smoking; this percentage has gone up to 64% as of 2005. With smoking now being banned in many public places, the risk of exposure has decreased from 29% to 23%. 68% of all Canadian workplaces are now smoke-free which is reducing not only the percentage of people exposed to cigarette smoke, but is also decreasing the amount of cigarettes being smoked throughout the day. The average amount of cigarettes smoked where smoking is permitted in the home and at work is 16 per day; when smoking is permitted in the home but banned at work, the number of cigarettes per day dropped to 14. If smoking was banned in the home but allowed in the workplace an average of 11 cigarettes were smoked daily. If smoking was banned in both the home and workplace, only 9 cigarettes a day were reported.

Recent studies have shown that 23% of Canadian men smoke; this rate is slightly lower for women at 20%. 28% of all smokers in Canada are between the ages of 18 to 34. British Columbia and Ontario have the lowest population of smokers at 18 and 21%; B.C. also has the highest rate of homes which have banned smoking (77 %). The territories have the highest rate of smokers; 30% of people living in the Yukon are smokers, 36% in the Northwest Territories, and 53% in Nunavut. While Nunavut has the highest rate of smokers, it has also experienced the sharpest decline in smokers, falling 12% since 2003. As well, 93% of workplaces in Nunavut have banned smoking as opposed to only 61% of smoke-free workplaces in Alberta. Quebec has the lowest rate of smoke-free homes, with only 47% banning smoking indoors.

This decrease in smoking is good news for Canadians. Fewer Canadians are picking up the habit, and those that do still smoke are smoking less. An improvement in health status can mean a decrease in your life insurance premiums; consult with your broker about this possibility.

Identity theft has quickly become one of the most fastest-rising crimes in Canada as well as the United States. By 2002, over 7000 Canadians had reported identity theft to the PhoneBusters National Call centre, with losses being reported at over $8 million. In the first quarter of 2003 alone, over another 2000 cases were reported, with estimated losses of more than $5 million. As well, 2 major Canadian credit bureaus have indicated that they have received approximately 1400-1800 Canadian identity theft complaints every month. The majority of these received complaints have been from residents of Ontario.

As Canadians are constantly becoming more reliant on using bank cards and/or credit cards, they can be leaving themselves at risk of someone gaining access to their data. As well, many Canadians are unaware of the personal information that their employer and/or government agencies have on file, which can also potentially be a target for identity thieves.

In order to protect yourself from identity theft you should be aware about how exactly most identity theft occurs. The most common ways that your information is accessed is:

• Theft of documents, credit cards, bank cards, etc. Theft of a wallet or purse is usually noticed very quickly. The owner can then call all of the credit card companies etc. to notify them of the theft in order to close those accounts. However, thieves have begun to also check people's mailboxes in order to steal bank statements as well as credit card statements, thereby gaining your information. Some banks also issue letters that contain "pre-approved credit card" offers; these can be stolen with the thief posing as you and asking for an address change. If you throw out any financial documents, including bill statements, make sure you shred them or otherwise destroy them first.
• Shoulder Surfing. Thieves can look over your shoulder or from a location nearby while you are using an ATM and gain access to your PIN. Then, by distracting you, your card can be switched with another one, now giving the thief (or thieves) access to your bank account. Another common method is by installing a fake ATM device that reads your card's encoded data. When using an ATM machine, guard your hand with the other one when keying in your PIN.
• Skimming. Your information can be stolen when thieves "skim" or "swipe" your credit card at restaurants, stores, etc with a device known as a skimmer. The skimmer records all your personal information data from the magnetic stripes on the back of your card. This information is then usually transferred to another location (commonly overseas) where it is re-encoded onto fraudulently made credit cards.
• Email spam. Most every Canadian has, by now, received an email purporting to be from their bank, paypal account, etc. that asks you to visit their website and update your information. Reputable banks or other financial institutions will never ask you to do this. This is a ploy for thieves to gather your personal information in order for illegal activities.
• Company and/or government database theft. There has been a significant increase of identity thieves trying to access large databases of personal information. This is happening in both the private as well as public business sectors.

To avoid being a victim of identity theft it is important to understand where the risk lies, and where you are potentially the most vulnerable. To minimize the risk of having your identity stolen:

• Sign any and all new credit cards immediately when receiving them and never lend them out to anyone.
• Keep a current list of all active cards you use and destroy ones that you longer use; update this list on a regular basis.
• Don't carry all of your identification with you if it is not needed on a daily basis (i.e. Social Insurance Number card, passport). These items should be stored in a secured environment until needed; they contain a lot of your personal information which if stolen, can be used to obtain fraudulent credit cards and bank accounts.
• Know your billing cycles. Notify your creditors and/or utility companies if your bills do not arrive at the same time each month (someone could be stealing them from your mailbox for the information).
• Closely check each itemized statement on your credit card bills in order to ensure that these actually are your purchases. Any discrepancy should be immediately reported to the issuing credit card company. Likewise, immediately report any card which you suspect is missing and/or stolen.
• Shred or otherwise effectively destroy any and all financial documents. This includes ATM receipts, credit card receipts, utility bills, as well as any other paper document that contains personal and/or account information. This also applies to any credit card applications that may be mailed to you.
• Make sure that any financial information you have in your home/office is stored securely, preferably locked up
• NEVER give any personal information over the phone, through the mail and/or over the internet unless it is you who has initiated contact and it is with someone you can verify. Reputable companies will never solicit you in this manner, so anyone who asks for your personal information in these ways is usually a thief.
• If you write down the passwords to your bank card, credit cards, etc. do not keep this information in your purse and/or wallet. If you need to have a written record of your passwords, store them safely, preferably in a locked storage space. This rule also applies to computer passwords.
• Check your credit report on a yearly basis in order to see that this information is correct and includes only your personally authorized activities.

If you have been the victim of identity theft, immediately report it to the bank and/or credit card issuer from which funds have been illegally obtained. You should also immediately report the illegal activity to your local police so that this information can be forwarded to the proper investigating department. Your creditor may require proof that you have made a police report in order to reimburse you for any unauthorized charges/withdrawals.

For more detailed information on identity theft, and to track the current trends in this area, Ontario residents can visit PhoneBusters. You can also use this resource to report any suspected criminal activity regarding your finances.

Having a budget that actually works for you can be a great tool to help achieve your financial goals. By having a spending plan that accurately reflects your goals, you can truly understand how and where you spend your money. Making a budget can also show you where you are unnecessarily spending money that instead could be going towards a more important purpose.

The first step in making a budget is to gather up all your financial statements. This includes bank statements, credit card bills, utility bills, etc. Also include items that may be paid on a yearly basis, i.e. car insurance, life insurance, property taxes, etc. The more information you have on your expenses, as well as income (i.e. bonuses), the more accurately you can define your spending and saving habits.

Calculate the amount of all sources of income. When using the amount of your paycheck, record the net amount (the amount after taxes).

Once you have all your documents together, create a list of monthly expenses. Items that are paid on a yearly, semi-annually or other non-monthly basis should be divided by 12 in order to figure out the monthly cost. Include this cost in your monthly expenses, as it is the amount you should be saving for that specific expense. Also include in this such financial items as retirement savings, RRSP contributions, etc.

Divide your expenses into 2 categories: fixed and variable. Your fixed expenses are the expenses that stay relatively the same each month. These include such items as phone, cable, electric bills, etc. as well as credit card payments. While these may change slightly, they will not increase or decrease dramatically throughout the year. For items such as car and life insurance, property taxes, etc. divide the total amount by 12 in order to find out the monthly amount of money that should be put away for that expense. This ensures that you are not stuck with a large bill that you have not budgeted for.

Your variable expenses are your expenses that tend to fluctuate more throughout the year, i.e. groceries, entertainment, clothing. This is also the category where you will be able to have more control over where to cut expenditures if necessary in order to reach your goals. This also gives you a more comprehensive understanding of your daily spending habits. You may be surprised to actually see how much, for instance, you spend on buying take-out coffee everyday when you see the weekly or monthly total.

People tend to only factor in the major expenses and bills. However, by keeping a daily log of how and where you spend your money, you will have a greater understanding of where exactly your money goes. By doing this for a week, you can have an accurate record of your daily spending habits. This is usually a category where spending habits can be changed in order to free up more money for either other expenses or for savings.

Once your expenses as well as sources of income are calculated and accurately identified, total the amount from each category. If your income is higher than your expenses, then you can prioritize this excess to such areas as retirement savings, paying more on credit card debt, etc. However, if your expenses are higher than your income, you will need to make changes in your expenditures.

Remember to review your budget on a monthly or bi-monthly basis. This will give you the opportunity to review your spending habits, as well as how well you stuck to your budget. You will always need to revise your budget for any financial changes, i.e. raise in pay, major expense (new car, etc) as your budget will have to be re-worked to reflect the changes.

While Canadian parents may be striving to achieve financial freedom as well as the "good things in life", we may be forgetting about what we are teaching our children. New studies are showing the correlation between a parents' attitude towards money and how this impacts the child's spending habits when they become adults.

A recent study out of the United States has reported that while 80% of parents described themselves as positive role models regarding money issues, only 19% had actually discussed issues such as budgeting with their children. As well, 48% had discussed the difference between 'wants' and 'needs', 36% revealed that they had never discussed any financial issues with their children.

While children will ultimately make their own decisions (and mistakes!) parents can help instill some sound financial ideals in their children. By simply being aware of some of the basic financial pitfalls, they can make better choices earlier on in life, and hopefully avoid those that quickly lead to large debt. It's also a great opportunity to help your child develop a healthy attitude about money, i.e. money doesn't buy happiness. It's natural to want to buy our children things that maybe we didn't have as children, but we also want our children to have respect for money and not be "spoiled".

The following tips are a guideline for not only discussing financial responsibility with your children, but also for parents to understand how their child may view the family’s financial patterns.

• Credit Cards: We are all bombarded with television advertisements and mailers regarding "low or zero interest rate" credit cards. Very few teenagers or young adults understand that this is a "teaser" rate and generally will rise to up to a 20% interest rate. At the appropriate age, you may want to get your child their "own" credit card on your account, with a low spending limit; this way you can monitor their expenditures, and help teach them how to responsible with credit. As most college/university students will obtain credit cards, this will offer your child the experience beforehand of being able to manage credit and not get into debt that they cannot afford to pay off.
• Being able to discuss money: Most teenagers will "tune out" if their parent(s) is yelling at them about their spending habits. Talking to them in a normal voice, and explaining where they made a mistake, instead of berating or using guilt, will usually accomplish a more positive result. Realize that mistakes will be made; by calmly explaining what happened, and what a better alternative would have been, will allow your child not only to learn more, but it will foster a more positive environment where your child can feel comfortable talking to you about money.
• Bribing your child(ren) with gifts: It's normal for parents to buy their child a gift or give them money as a special reward for an achievement, but beware of using this method every time. You cannot expect a child to understand the "value of a dollar" if they grow up with the expectation that every time they do something well, they get something. A better alternative is to discuss the price of the specific item they want, and then agree on what the appropriate amount of chores is required in order to earn it. This method allows your child to learn early on to associate the monetary worth of the items they want.
• Lead by example: Whether you intend to or not, your child will mimic your spending habits. For instance, you cannot expect a child to be responsible with credit cards if he/she has grown up in an environment where parents are constantly complaining about how high their bills are. This also applies to saving habits and budgeting. If you don't already have one, make a household budget, and discuss it with your child.
• Shopping is NOT entertainment: Teenagers especially can have the tendency to view shopping as a social event. While "hanging out at the mall" is not a problem, having your child view having to spend money in order to have fun can be a problem later on in life. Try to expose your teen to other forms of "fun events" that don't require them to spend money.
• Budgeting: This is a skill that will last your child a lifetime. Even with young children, giving them an allowance, and showing them how to keep track of their spending, can teach them this basic concept. As they grow older, you can help them introduce items such as savings, etc. If your teenage child gets a job, sit down with them and help devise a budget that gives them a savings component, as well as budgeting for clothing, entertainment, etc.

By talking to your children about finances you can give them the tools they need later on in life. Also include financial mistakes you have made; this will allow them to see that no one is perfect, and hopefully they will learn to avoid the errors you have made. By ensuring an environment where your child can easily and comfortably talk to you about money, they will be better prepared for when they are independent and have to be in control of their own financial destiny.

For many retiring Canadians, living outside of the country either full-time or part-time can be an attractive option. Whether choosing to winter in a warmer climate, or altogether moving to a different country, you need to be aware of the financial issues surrounding these decisions. Canadians can reside in another country without having to give up their Canadian citizenship; however you will still be subject to Canadian taxation laws. It's important to understand the taxation and financial regulations of either living abroad.

There are many things to consider when deciding where to spend your retirement years. If you are planning on living outside of Canada, you should do some research on the country where you plan on moving to. You will need to research that particular country's immigration regulations, as these vary greatly depending on the country chosen. You should also familiarize yourself with that country's laws, as well as political climate. Realize that countries you've enjoyed vacationing in may not offer the type of lifestyle you are accustomed to when it comes to actually residing there.

Financial and taxation issues are very important as well when contemplating to live outside of Canada. Some developing countries may seem to offer a lower cost of living; however many lack the resources to collect taxes on foreign sourced income, and instead will impose high consumption taxes and/or import duties. Especially for those who will be living on a fixed income and/or budget, you will need to thoroughly understand the financial implications of the country you are considering. You should also factor in the costs of traveling back to Canada as well as items such as larger phone bills to maintain contact with your friends/family.

Another major financial consideration will be health care and insurance. As Canada offers a very high standard of medical care, some countries may be considered inadequate by our terms. If you have specific health problems, i.e. diabetes, heart condition, you will need to ensure that your country of choice has medical facilities as well as physicians that are capable of giving you quality care. You will also need to obtain full health coverage as you will no longer be entitled to your Canadian provincial health care benefits.  Be aware that even if you have supplemental health insurance (to supplement your provincial healthcare plan), this will not be enough coverage when leaving Canada. If you are planning on living abroad only part time, remember that your provincial healthcare only provides limited coverage for up to only 3 months. Your level of provincial benefits will probably not be enough to fully cover any medical expenses that you may incur; it is advisable to have your own health insurance even when leaving Canada on a temporary basis. Depending on the length of your absence from Canada, you may also have to wait for your provincial health plan to be reinstated, which will temporarily leave you without health insurance coverage.

If you are planning on leaving Canada to live in another country (either full or part time) you will need to ensure that your passport is valid, and doesn't expire while you are out of the country. You will also need to open a bank account in your new country; it is a good idea beforehand to research their banking regulations. You may also want to have a safety deposit box in order to safeguard copies of your documents, i.e. birth certificate, identification which bears your photo, etc. You should also have the numbers of the Canadian consulate on hand should you require these in an emergency. As well, have a copy of your visa (if it is required).

If you are planning on permanently residing in another country, you will need to establish a legal status there, i.e. permanent residency or citizenship status. Requirements for legal status vary greatly from country to country, but usually will be based on principles such as employment status, investment status, and/or family connections. Some countries may recognize people such as retirees with a guaranteed minimum income as potential immigrants. Many countries will require proof of guaranteed income in order to establish sufficient support for the retiree and any dependents. You will need to provide financial documentation supporting your claim that you meet these requirements; have copies of bank statements, investments, RRSP’s, etc ready in order for submission.

You can still receive your Canadian Public Pensions while living abroad, provided that you still qualify for the benefit. Old Age Security (OAS) requires that you lived in Canada for at least 20 years after the age of 18; as this benefit is subject to an income test, you will need to file an annual tax return which reports your worldwide income. Canada does impose a withholding tax on "passive" income paid to nonresidents from Canadian sources. This includes interest, dividends, RRSP income, rental income, RRIF income as well as pension income. This rate is usually 25%; but may be reduced depending on the terms of any tax treaties that exist between Canada and your new country of residence. You will also be required to file tax returns in Canada if you are still receiving income that originates in Canada, i.e. income from a business in Canada, the sale of taxable property, or any income that is earned. However, you may also be entitled to a tax refund on such items as rental income and/or pension income if your taxable income is low enough to qualify.

If you are planning on retiring and living outside of Canada, you may want to obtain advice regarding the financial and taxation issues. Do your own research about any potential countries you are interested in, either on a part or full time basis, so you can better plan ahead. Remember, the earlier you start planning, the better prepared you will be when you actually retire.

The majority of working Canadians have Employment Insurance (EI) deducted from their wages. This insurance is intended to provide temporary financial assistance to those who are unemployed and looking for work and/or upgrading their skills. EI also provides financial assistance for other reasons though; such as maternity leave, work absence due to illness, caring for a new child, as well as short-term help for those who need to care for a family member who is seriously ill with a significant risk of death.

Compassionate Care Benefits are intended to help those who are employed, but who need a short leave of absence in order to care for a relative that is gravely ill and at risk of dying within 26 weeks. People who are collecting EI at the time can also ask for this benefit. This benefit is payable up to a maximum of 6 weeks; however, it can be shared among eligible family members (i.e. 3 siblings can each claim 2 weeks to be used in succession.)

In order to be eligible for Compassionate Care benefits, you must be able to prove that your regular weekly earnings have decreased by more than 40%. As well, you must have accumulated 600 insured hours within the last 52 week period, or since the start of your last claim. This is known as the qualifying period. There is a 2 week waiting period; however if the 6 week period is shared by family members, only the first person will serve the waiting period.

EI recognizes family members as either your blood relative or a blood relative of your spouse (if common law spouse, you must have resided together for at least one year). These relatives include:

• Your child or the child of your spouse
• Your wife/husband or common-law partner
• Your parent or the parent of your spouse
• Step-parent or common-law partner of a blood parent
• Sibling or step-sibling, as well as sibling or step-sibling of your spouse
• Father or mother in law, either married or common-law
• Son or daughter in law, or your spouse's son or daughter in law
• Uncles and aunts, as well as their partner; or your spouse's uncle or aunt, or their partner
• Nephew and nieces; also a nephew or niece of your spouse
• Current or former foster parent; current or former foster parent of your spouse
• Current or former foster child as well as their partner
• Current or former ward; current or former ward of your spouse
• Current or former guardian or their partners

There is also a provision for someone who although they are not "related" they do consider you as a family member, i.e. friend or neighbor. In this case, a Compassionate Care Benefits Attestation is required from the person who is gravely ill and requesting your help. Care/support is defined as providing psychological/emotional support, arranging care through a third party, and/or directly providing or participating in care.

When applying for Compassionate Care benefits, you will be required to provide documentation proving that the ill family member is in need of care/support, as well as being at risk of dying within 26 weeks. 2 forms will be required to be submitted:

• Authorization to Release a Medical Certificate which is completed and signed by the ill relative or their legal representative
• Medical certificate for Employment Insurance Compassionate Care Benefits which is completed and signed by the ill relative's medical doctor to confirm the significant risk of death within the prescribed 26 weeks

These forms must be submitted at the same time; as well, the applicant assumes the cost of any fees charged by the doctor/legal representative. Only one Medical Certificate is required even if several family members are sharing the 6 weeks leave. If more than one is submitted, the first one submitted will determine the beginning and end of the 6 week period. Compassionate Care benefits end when either the 6 weeks have been paid up and the time period has expired, you have exhausted the maximum payable benefits allowed for your claim, or if the family member dies or no longer requires care and support. If the family member dies while you are receiving this benefit, it is your responsibility to immediately inform the administrator of your benefits in order to prevent EI overpayments.

For more information regarding eligibility as well as the complete list of requirements regarding this benefit, please visit the Service Canada website.

If you're like the majority of  Canadians, funeral planning is not a topic you wish to think about. Whether it's your own funeral, or that of a loved one, it's a subject that we all put off planning. But do you even know how much a typical funeral costs? What are your options? What about pre-paid funerals? These are all questions that do require some thought as well as financial planning, and should also factor into the amount of your life insurance coverage.

Pre-paid funerals do have certain advantages. It ensures that your wishes are specifically carried out, and takes the pressure away from your loved ones of making plans during their time of bereavement. It also removes the financial burden from your family. Pre-paying your own funeral also gives you the time to shop around for the best prices and to decide your own budget. If you do choose this option, make sure you inform your family of these arrangements, who you have pre-paid, and give someone copies of all the necessary paperwork. While pre-paid funerals are designed to give everyone involved peace of mind, there are some disadvantages to this option. For instance, there is no guarantee that the service provider you have pre-paid will still be in business at the time of your death. If you die before all the payments have been completed, the service provider may demand that your survivors pay the outstanding balance before they will honor the contract. As well, if you happen to move outside of the area that the service provider services, you run the risk of not being able to get a refund and/or transferring the services. Penalties may also be assessed for any late payments, and if you change your mind, there is a chance that you will be refunded substantially less than what you have paid in. Canadian provinces may have different regulations regarding this topic, so research what the current law is in your home province.

An alternative to a pre-paid funeral is to set up an interest bearing account that is specifically earmarked for your funeral expenses. This choice will still give you the time to decide on what type of service you would like, as well as pricing the various options you have. If you choose this type of planning however, you must keep in mind that the prices of what you have chosen will probably increase as time goes on, and plan accordingly. Once again, if you die before enough money has accrued in the earmarked account, your loved ones will be faced with either going against your wishes, or having to pay the balance themselves. As well, your loved ones must be able to quickly access the bank account, as well as be informed and able to carry out your wishes.

In order to either plan your own funeral, or plan one for a loved one, you must be aware of all your options, and what these cost. The average funeral in Canada today can range in price from $2,500 to $6,000. This price range does not include such added expenses like a burial plot, headstone, etc. Burial plots can range in prices depending on the location of the cemetery; as well not all burial plots are priced the same, some "desirable" locations within the cemetery are usually more expensive. Likewise, the size and detail of a headstone will determine the cost. The cost of a funeral will depend on what type of service you want, whether you choose burial or cremation, etc.

The 2 most common choices are funerals and memorial services. Memorial services are generally less expensive, as there is no casket, no embalming and no grave liner costs involved. A typical memorial service will cost around $2500, depending on what type of service you are planning. This does not include the cost of cremation however, which can cost anywhere from $500 up to $2000.  A memorial service is simply a service to commemorate the deceased's life; usually the body has already been cremated. Because there is no body present, there are more choices available regarding the location of the memorial service. This type of service tends to be more informal than the more traditional funeral.

Funerals have long been the most commonplace option when a loved one dies. Depending on the type of funeral planned, the cost can run from $2500 to over $7500. Although this is a more expensive alternative to a memorial service, funerals offer the advantage of the funeral home bearing most of the responsibility for the arrangements. They will arrange for the transportation of the body to the funeral home, as well as file the necessary paperwork such as the Declaration of Death. By law, Canadian funeral providers must present you with an itemized list of the prices for all the services and products that they offer. It is important to ascertain whether or not the funeral provider is what is known as an immediate disposition funeral provider; this type of provider has limited facilities and does not offer all services. Legally, a funeral provider must disclose that the facility is not allowed by law to provide full-range funeral services.

Choosing a funeral home, especially when planning the funeral for a loved one, can be difficult. If no previous arrangements have been made, and you need to acquire the services of a funeral home, asking the following questions will help you to choose the right facility:

• Can the funeral home accommodate all your needs? Do they have a chapel, visitation room, reception room, catering facilities, etc?
• Who have your friends and/or family used in the past and can recommend?
• Is the funeral home in good standing with an applicable professional association?
• How long has the funeral home been in your community? What is their professional and personal reputation?

It is important to understand what exactly a funeral home does when assisting you with a funeral. Typically, a complete funeral service requires 80 hours of work; this does vary depending on the individual needs of the family as well as any personal and/or religious requests. The majority of the funeral costs are incurred by charges for professional service, merchandise and final disposition. A qualified funeral director will be able to explain these costs, and assist you with planning a funeral that conforms to your budget.

The professional fee that is charged by the funeral home should include such services as:

• Transfer of body from place of death to the funeral home
• Obtaining the medical certificate of death and completion of government forms, registering the death and obtaining any necessary permits
• Sanitary care of the body, including embalming, restoration, and readying the body for viewing if requested. Embalming is not a legal requirement, but it may be required in instances where the body is being transported after 72 hours.
• Use of the funeral home and all necessary facilities such as: arrangement office, reception area(s), preparation room, chapel, selection room, parking, etc. This should also include the use of service vehicles (i.e. hearse).
• Transfer of the deceased to the crematorium and/or cemetery
• Complete personal supervision of all service arrangement details that precede as well as follow the services: the arrangement conference with the family, preparing and placing an obituary notice, consulting with clergy, cemetery and/or crematorium, arranging and caring for floral arrangements.

The other major expense is the merchandise, i.e. casket, urn, etc. It is important to remember that by law, a funeral home must display their lowest priced caskets and urns. They must also have a book/brochure illustrating the entire product line of caskets that they sell.

Using a reputable funeral home can make the time of bereavement much easier as they will take care of all the details for you. They can also help you make arrangements that are within your budget, as well as helping you to honor any specific requests that may have been made by the deceased.

It’s important when choosing the amount of your life insurance coverage that you incorporate the funeral expenses. You may want to consult with a funeral director in order to understand what all will be involved, and what expenses your survivors will be facing. You may also want to consult with your life insurance broker about ensuring that you have the right amount of coverage.

For many Canadian seniors, maintaining their independent residence sometimes isn't a feasible option. Health issues may make living alone a dangerous situation for some people. Children and/or caregivers of seniors who are facing this issue may be confused as to what is entailed, what level of care is needed for that individual, and what is covered by provincial insurance and what isn't.

Some seniors may be able to live in their home (at least for a period of time), provided they have In-Home Care services. Many different programs are available; some are funded by government agencies or non-profit organizations, while others are offered by for-profit private service organizations. The home care services that are typically provided include:

• Personal nursing care
• Physiotherapy and/or occupational therapy
• Speech therapy
• Counseling
• Day programs
• Friendly visiting
• Transportation
• Foot care
• Homemaking and/or home maintenance
• Information and/or referrals
• Meal programs (i.e. Meals On Wheels)
• Respite Care
• Emergency Response Service

If you think that the senior you care for may need these types of services, contact a local agency to get an assessment. Some services may be covered under Ministry of Health funding, regardless of income; as well, some may offer a subsidy for those who fall within a certain income bracket. Some however, will have to be paid for out-of-pocket if you do not have private insurance coverage.

For seniors who are no longer able to live on their own, a retirement residence may be the best solution. This can be the ideal arrangement, giving the senior the level of support and security they require while being able to maintain their independence and privacy. A retirement residence can also offer the social aspect for those seniors who are feeling lonely and isolated. Retirement residences can greatly vary in terms of what services they offer, as well as the types of accommodation they offer (i.e. single or shared rooms), as well as prices. The majority of retirement residences are privately owned and operated with no government funding, which means you and/or the resident must assume all the costs.

If you are looking into a retirement home for a loved one or someone you provide care for, it is essential that the senior is actively involved in the selection process. Some things to remember when choosing a retirement residence are:

• Make a list of all homes you plan on visiting; also make a list of questions you want to ask, so you won't forget when you are there. Keep notes on the different homes you visit.
• Ask questions not only of staff, but of the residents. Ask their perceptions of the residence, as well as what they like and dislike.
• Don't visit just once, plan another visit, but at a different time of day (i.e. go for a lunch or dinner)
• Ask to view all of the residence, not just the room and common areas. Checking the kitchen and stairwells can give you a good indication of the level of cleanliness and how often things are maintained.
• Ask if they will allow the prospective resident to actually spend a night at the residence, so that they can get a better idea of what to expect.
• Ask for a list of families who will give the facility a recommendation.
• Ask about the neighborhood, i.e. how close are such things as hospitals, churches, dentists, etc.
• Ask about the fees, i.e. is everything included in the price quoted, or will you have to pay extra for additional services, and if so, how much
• Ask how often are their rates increased, and how much notice do they provide for the increase in price

Long-Term Health Facilities (formerly known as nursing homes) are different than retirement residences. A long-term facility is needed for those seniors who have significant health issues and who require a greater deal of care. This type of care is needed for those who, because of age and/or level of disability, can no longer be properly cared for in the community. This is an ideal solution for those seniors who require care on a regular basis, but who do not require long-term hospitalization. Some long-term facilities are publicly funded, while others are not.

If you are facing the challenge of finding services for a senior in your care, you need to find out what exactly their insurance will cover. You may also want to consider the possibility of needing these services in the future, and have the right insurance that addresses this issue. Tangible offers a hybrid policy that combines life insurance with a long-term care component. If needed, a certain percentage of the policy converts into LTC insurance, if not, it simply remains as life insurance. This type of policy offers you the flexibility and security of being able to ensure that you will have the right type of coverage for whatever your needs may be.

An important part of any financial plan is dealing with your debt. For most Canadians, debt is a fact of life and is not detrimental to their overall financial goals. However, too much debt can negatively impact financial health. Missing payments may end up hurting your credit rating; as well you may not be able to save and/or invest the money you need to in order to accomplish your long-term goals.

Not all debt should be considered "bad". Debt that is incurred for the purposed of attaining assets that will more than likely increase in value is considered "good" debt. This includes buying a home, borrowing money to invest (stocks, bonds, RRSP's) that can end up making you more money than what you spent on the interest payments. These assets can also be used to secure the debt in order to qualify for lower interest rates. Money borrowed for investment purposes may also be tax-deductible.

Debt that is viewed as "bad" comes in the form of purchasing items that depreciate in value (cars, electronics, etc), or is used for daily spending habits. Debt is usually incurred this way in the form of credit cards. In fact, debt in this form can actually hurt your chances of getting a mortgage and/or the amount you are qualified for. Credit cards that have really high interest rates can keep you in debt for a long time if you cannot afford to pay off the balance immediately. 

There are ways to manage your debt without having to to take the drastic measure of declaring personal bankruptcy. The following tips can be used as a guideline not only for those currently in debt, for also for those who wish to avoid having their debt become out of control.

• Spend less than you earn. Keep a running log of everything you spend. Make sure to factor in expenses that may only occur once a year (house insurance, vacations, Christmas spending, etc). These expenses should be divided by 12 and added to your monthly total of what you spend. Your log will be able to help you determine your earnings/expenditure ratio, and give you an idea of where you can cut back, i.e. taking lunch to work, etc.
• Restructure your debt. Almost half of Canadians are paying more interest than necessary due to the fact that they haven't shopped around. Invest some time researching getting a cheaper interest rate for not only credit cards, but for your loans. 
• Refinance your mortgage. You may be able to get a lower interest rate on your mortgage by refinancing it. You also may want to consider using a home equity loan and use the money to pay off credit card debt, which is generally higher in interest payments.
• Personal line of credit. This can be one of the cheapest ways to borrow money. Lines of credit can be secured against your assets, or unsecured. The rates do vary with the prime, but will be considerably less than the interest charged for credit cards. Money obtained through a line of credit is available for any purpose.
• Consolidation loans. Unlike a line of credit, this money is borrowed for the specific purpose of paying off debts that carry higher interest rates. The bank may directly pay off your creditors in order to insure that the money is spent in the manner for which it is intended. The bank may also require that you cut up your credit cards and/or that no new debt is incurred.

The amount of your debt along with the amount of your income will determine the best way for you to manage your debt. The end result will be a healthier financial plan, and the realization of your long-term goals.

Midnight of February 29, 2008 is the deadline for RRSP contributions for the tax year of 2007. RRSPs give Canadians a tax break, as well as letting your hard earned money grow tax-deferred. This differs from capital gains and interest accumulated on other investments, which are added to your taxable income for the year. As RRSPs are deducted from your taxable income, it effectively reduces the total amount that is subject to taxation. Waiting until retirement to cash in your RRSPs means that you are now in a lower income bracket, therefore you will pay less taxes, as your RRSPs are only taxable upon withdrawal.

RRSP is an acronym for Registered Retirement Savings Plan. It is not a specific financial product. It is rather a number of investments that are registered with the federal government specifically earmarked for your retirement. The Income Tax Act has a current list of eligible investments from which you can choose; the most popular is mutual funds, guaranteed investment certificates, accumulation annuities , segregated funds, and equities. However, you have a wide range of possible investments to choose from, depending on the financial risk you are willing to take. Some investment choices are quite volatile; they can make you a lot of money, but you must be prepared to take the risk of losing a lot of money. Others are more conservative; you may not make as much, but the risk factor is lower. Talk to your financial advisor about which types of RRSPs are best for your retirement savings plan.

Due to last year's federal budget, Canadians can now contribute to RRSPs until the end of the year in which they turn 71 as long as they are still earning income. This is a 2 year extension from the previous deadline. Once this deadline has been reached, 3 choices will be available:

1. Converted the RRSPs into a Registered Retirement Income Fund (RRIF) which is a tax-deferred retirement plan. Like RRSPs, the RRIF account is registered with the Canadian Revenue Agency. RRIFs are used to generate income from savings accumulated from the previous RRSPs. Once an RRSP has been converted into a RRIF, no further contributions can be made. RRIFs offer an annual minimum withdrawal which is cashed out and sent to the accountholder; this amount is tax free.
2. Purchasing an annuity. This is a good financial idea when interest rates are higher.
3. Cashing out. This is not recommended as taxes will have to be paid on the whole amount.

The 2007 tax year for the first time also offers senior couples the option to split their pension income. They can now allocate up to 50% of their eligible pension income to their spouse/common law partner. This includes company pension plan payments, RRIF payments as well as annuity income. For those who are still working and contributing to their RRSPs, it may be advantageous to contribute to a spousal RRSP if your spouse/partner has either no or little income for the year.

You can "over-contribute" by up to $2000 to your RRSP without being penalized. While you will not be eligible for the tax deduction, you will benefit as the earnings will be tax-free. Consider the option of borrowing money if you do not have the available funds to contribute the maximum amount; you may be able to make more money than you will spend on the interest for the loan. To calculate what your maximum allowable contributions are, use the calculator found at the Canadian Savings Bond website.

It's also important to decide who will be the beneficiary of your RRSP. By naming your spouse/common law partner, dependent child or grandchild, the proceeds upon your death may be tax-deferred even longer. Discuss this with your financial advisor in order to set up the most beneficial plan.

Most people assume that only those with wealth need a financial planner. However, everyone can benefit from professional financial advice, especially when it comes to retirement planning issues. Hiring or consulting with a financial planner can help Canadians avoid costly financial mistakes that can greatly affect their future.

A qualified financial planner will have a broad range of financial knowledge, including such issues as insurance, tax planning, investments and estate law. He or she will be able to help you coordinate your financial strategy with the other relevant parties, such as your estate lawyer, insurance broker, investment professional, etc. The financial planner you choose will be able to cover all aspects of your financial health, and make sure all these areas are sufficiently covered.

It's important to recognize that many provinces do not regulate the term financial planner. There is however a not-for-profit organization known as the Financial Planners Standards Council (FPSC) which sets the professional standards for the industry. The FPSC sets, enforces and promotes the highest competency and ethical standards in the financial planning industry. Planners who are recognized by the FPSC are denoted by the letters CFP, which stand for Certified Financial Planner. Financial planners who have this credential have passed a national examination for financial planning and are held to a strict professional ethic.

Whether you want to consult with a financial planner, or plan on hiring one, the following  tips will help you choose the planner who’s right for you:

• Have a basic idea of what you want. While your financial planner will help you come up with a concrete financial plan, have a general idea of what your goals are as well as thoughts regarding insurance, estate planning, investing, etc.
• Be prepared. Do your homework to familiarize yourself with various financial planning strategies as well as the terminology.
• Get referrals.  Ask your friends and/or colleagues who they use for their financial planning. You can also contact the FPSC for a referral to a professional financial planner.
• Ask to see qualifications.  A professional will have no problems disclosing their education status, what their degree is in, as well as if they are qualified as a Certified Financial Planner.
• Shop around. Plan on interviewing several financial planners. Ask such questions as how long they’ve been in business, whether their assistants will be handling your account, etc.
• Do a background check. You can contact their professional associations to see if complaints have been lodged against someone, and if so, what the outcome was.
• Ask for references. If the financial planner you plan on using has associations with other professionals i.e. insurance agents, investment counselors, etc., ask for their phone numbers so you can ask them questions.
• Know what to expect. Get a document in writing about the method of compensation, qualifications, etc. so you know exactly what the financial planner is offering, as well as the method of payment.
• Reassess the situation on a regular basis. If you are hiring a financial planner on a long-term basis, know what's going on. Schedule regular visits with your planner so he or she is aware of your changing needs, as well as time constrictions.

Once you have decided on which financial planner you will be using, whether for a consultation or a long-term relationship, you’ll need to do some thinking on your own about your finances. While your planner is there to give you valuable advice, you need to be knowledgeable about your financial status, as well as the areas you need the most help with. The areas that are most common in financial planning are:

• Budgeting: Regardless of income, everyone should have a household budget. Making and following a budget will let your financial planner know exactly how much money you will have every month to invest or save. This will help your planner to set up a plan that will best suit your needs. Your planner will also have suggestions about how much money you will need every month in order to reach both your short and long term financial goals.
• Saving and investing: In order to reach any sort of financial goals, this needs to be determined. You will have to decide on short term financial goals such as savings for a vacation, new cars, etc. You also need to decide on long term financial goals such as age of retirement, university education for your children, etc. A financial planner will be instrumental on helping you figure out the exact amounts, and the best investing plans for you in order to reach your goals. You and your planner will also have to decide what level of risk is going to be involved in your investment strategy.
• Insurance: Your planner will be able to look at what you currently have insurance for, and whether or not it is sufficient coverage. It's important that you have the right coverage so that your assets are protected, as well as coverage for if you can no longer work, etc. The proper amount of life insurance is also important should anything happen. Your financial planner can work in conjunction with your insurance broker to make sure that all your insurance needs are covered.
• Debt: Your goal should be to get out of debt, and your financial planner can help you devise a way to make that happen. Make sure you have all the information such as credit card balances, loan statements etc. in order to accurately calculate the total amount you owe.
• Taxes: This is an important part of your financial plan. Your planner will be able to help you with a strategy that can minimize your tax liability. Proper tax planning is essential to a successful financial plan.
• Estate: Your financial planner can help you make sure your plans are carried out as you wish. Depending on the size and intricacies of your will, your financial planner may also be one of your executors. You can also get advice on the taxation issues that will be applied to your estate.
• Retirement: In order to enjoy your retirement, you will need to have money saved. Letting your planner know at what age you want to retire, and the type of lifestyle you would like to have will enable him/her to set up the proper investment strategy for you.
• The whole financial picture: It's obvious that are many factors to consider when setting up a successful financial plan. This is where a planner is the most help; to put together all these components and give you the best advice in order to attain all your goals.

A financial planner, whether for a consultation or a long-term relationship, can be a great asset. Even if you don't have a complex financial situation, getting some help and clarity on your financial issues can make sure that you have the latest information and advice available. Your planner will be able to consider all the aspects involved and help you attain your goals. For more information on financial planning and choosing a qualified planner visit the Financial Planners Standards Council, you can also obtain a list of qualified professionals in Canada.

Each January brings with it the usual resolutions: more exercise, spending more time with family, etc. However, January is also a good time to look back at your finances and re-evaluate your financial strategy.

Re-evaluate your health and life insurance coverage. If you have successfully quit smoking/ and or lost a significant amount of weight, you may be eligible for cheaper rates. You  may want to apply for disability insurance so you’re protected in the event of illness or injury.

Review all your insurance policies. For instance, if you belong to AAA Auto Club, which includes a towing service, remove the towing service on your auto insurance. For those who have health insurance as well, you may not need the medical insurance that's included in the your auto insurance plan. By removing these unnecessary items, you can reduce your premiums. Know exactly what is covered in your health, life, and auto insurances so that you have the coverage you need, and aren't paying for unnecessary items. Consult with your insurance broker about any new insurance products that have become available and may be beneficial for you.

Review your spending and saving habits. Set a fixed amount that goes directly into a savings account every payday. If you need a debit card for this account, get one that allows you only deposit, not withdraw, to avoid impulse buying.

Pay your bills online. You save money on postage and checking costs, and have immediate access to your records and payment history. It's also more environmentally friendly!

Review your credit report annually and try to raise your credit score. Cancel any unused credit cards as well as limit the amount of credit lines that are in your name. Set up loans with automatic payments so you will not be penalized for late payments.

When interest rates are low, add to your mortgage payment to pay down your balance. See if your bank or credit union will allow you to convert your mortgage to biweekly payments that match your pay periods. This method gives you the opportunity to make one extra monthly payment each year, and pays down the principal and saves on interest. Be advised that some institutions may charge a fee to set this payment method up.

Start the new year off with a financial plan in place that realistically reflects your goals. Discuss your goals and other financial concerns with your insurance broker in to make sure that you have the correct coverage.

As the year 2007 nears the end, it's a good time to evaluate your business. Begin the new year with a detailed business plan in place, as well as defining your goals. Go beyond the profit and loss figures; maybe it's time to research using new suppliers, a new marketing strategy, etc.

Use the arrival of the new year as a time to step back and re-focus. By financially planning for your business, you give yourself an advantage. Being proactive rather than reactive can have positive results. You need to have a budget in place to ensure a positive cash flow. This needs to cover not only expenses such as payroll, but contingencies as well. Money will need to be set aside for taxes, capital expenditures, overhead, etc.

Look ahead to what you wish to accomplish in the coming year. You may wish to buy new computers, or upgrade your technology. This is also a good time to consider whether you need to hire more people to accomplish your new projections. If you don't already have it, group insurance can be a useful tool in attracting and retaining qualified personnel. It's also a wise decision to decide on changing your corporate identity. Changing your corporate identity may mean different liability and tax considerations; many of which are required to be done in the first few months of the year.

If you are partners in a small business, it can be beneficial that all partners have a term life insurance policy. These can be taken out, with the other partner named as beneficiary in order to insure the business. Agree on the amount and the length of term you wish to purchase; this will safeguard your business should something happen to one of the partners.

Chances are, if you have employee benefits, you have some type of life insurance coverage included. While great attention is paid to the details of the health insurance component, many people don't pay attention to the life coverage. It's important to know exactly what your group insurance covers, and to be sufficiently insured.

Group life insurance has it's own advantages and disadvantages. It can be cheaper because the costs are pooled. This means that everyone enrolled in the plan, regardless of gender and/or health habits will pay the same amount. As well, marketing and sales costs may be absorbed by the insurer.

However group life insurance usually has a maximum coverage amount. Most plans will offer coverage around $25,000 and may not go any higher than three times your salary. Depending on your needs, you may require additional insurance coverage. Use the insurance calculator to figure out how much you really need, and purchase additional coverage if needed.

Another important factor is whether or not your group insurance is renewable. Most group life insurance is issued as renewable term, which means the premiums can increase at a steady rate. There is usually no guarantee of renewability and/or the cost of premiums. The master policy may also be revised without consulting the employees, which means you may not consistently have the same coverage and/or rates.

Your group life insurance will usually only cover you for as long as you remain with the same employer. This means that you may find yourself without coverage when changing employers but not having the same optimal health status as when you first started. This could be reflected in higher premiums if you apply for individual life insurance coverage. This is also applicable if your employer changes their insurance carrier. If you retire, you may not be covered anymore, and at a time when life insurance is important.

It is important while you are still in good health, are planning on getting married, buying a home, etc. to know how much coverage you need. If your group benefits does not sufficiently cover you, then you may want to consider buying an additional policy to make sure all your needs are met. This can be done with either a term life or a whole life policy; talk to your broker about which is best for you. If you are planning on retiring and do not have any other life insurance, you can apply for Guaranteed Issue coverage. If you were not sick and/or injured when your group life was terminated, you will eligible to apply for the same amount of FollowMe Life coverage as you originally had. Your spouse can also apply with this program.

No one likes to think about the possibility of divorce. Unfortunately, however, it does occur, leaving emotional and financial uncertainty in it's wake. As with any major life change, attention needs to be paid to your financial plans and goals.

Due to the emotional nature of divorce, it can be hard for some people to concentrate on the financial aspects of their life. However, as hard as it may seem, some decisions need to be made regarding savings, housing, etc.

If you have children, you will need to work out a financial plan with your ex regarding support. You will also need to factor in such expenses as post-secondary education, and arrange some sort of savings plan in order to provide for future expenditures. Also consider such items as vacations, car insurance for teenagers, etc. Both parents should have life insurance in order to protect the children's financial interests should something happen to one of you.

If you are just recently separated, do not rush out and purchase a new home. Rent for a few months, and house hunt, but avoid the impulse purchase. Buying a home that you later decide you don't like, or have decided to move to another area, etc. can seriously affect your finances. Allow yourself some time to get acclimated to your new situation, and avoid making any big purchases. Wait until you are more certain of what's in store for yourself, and then make a decision on home buying. If you are planning on selling the marital home that already has a mortgage, you may find it hard to acquire a new mortgage until the first has been settled.

Obviously, you will need to make a new financial plan, based on your earnings, not the combined earnings you had. Re-evaluate your spending habits as well, they should reflect only your income. Many people find themselves deeply in debt when they keep spending the same amount, but with only half the income coming in. As well, consider your long term financial goals, with a view towards retirement. It's advisable to consult with a financial planner at this point in order to ensure a secure financial future for yourself.

Both parents can purchase term life insurance policies that are specifically designated for the care of their children in case of death. Both parents can buy term life in an amount that takes care of the children until they are adults. Disability insurance is a good idea as well, as there is only one income in the house. Should you become ill or get injured, you will need to still have money coming in to take care of the household responsiblities.

Many Canadian homes have both parents working; either by choice or financial necessity. If you are planning on having one parent stay home full time, it's important to plan for it financially and emotionally. Although reducing your family income can be a rough transition, being prepared can help you adjust to the new changes.

Don't just quit your job. It's a good idea to actually try living on one income before actually quitting your job. Do a "dry run" for 3 months living solely on the one paycheck, and bank the other. This gives you the option of changing your plans if necessary without having to look for another job, as well as some savings!

Review your financial plan. You will need to re-work your financial plan, as your yearly income will be decreased. This change in income will affect not only your short-term finances, but your long term goals as well. Expensive items, such as cars, vacations, etc. will need to be discussed and planned for. As well, long term financial goals such as retirement may need to be reworked.

Make a new budget that reflects the change in income. Your new budget should cover all the household expenses as well as savings based on the one salary. It is recommended that 60% of your gross income goes to committed expenses, i.e. taxes, mortgage, utilities, credit cards, etc. 10% should be saved as an emergency fund (ideally this fund covers 3-6 months of living expenses). 20% should be committed to your long term plans and retirement fund. The remaining 10% of your income should be spending money to cover expenses that are not considered a necessity. Each spouse should have their own bank account, in which they each receive 5% of the "fun" money each month to spend as they please. This gives both partners some financial independence.

Review your insurance before quitting your job. The stay-at-home parent needs to maintain adequate insurance. Life insurance not only covers lost income in case of death, but the costs required to maintain the family. Should the stay-at-home parent die, expenses such as daycare, home maintenance, etc will need to be covered. Disability insurance at this stage is also recommended in case the working parent suffers an accident or illness. It is also important to review health insurance policies to ensure that the working parent has sufficient coverage that covers the whole family. If the parent who is quitting their job has been the sole provider of health coverage through their employer, other insurance is available. HealthQuotes.ca offers FollowMe, which does not require a medical questionnaire if applied for within 60 days of discontinuation of group insurance. This policy provides health and dental insurance at an affordable rate.

As family finances change, it is important that all financial goals are reconsidered. Your insurance coverage needs to reflect these changes in order to best provide for your family. Before making any major decisions, consult with your insurance broker in order to ensure you have the correct coverage, and to make the necessary changes.

Life-Quotes.ca is pleased to announce a new insurance product available for Ontario and Quebec residents. Ontario Blue Cross has released a life insurance policy that can be combined with Long Term Care and Critical Illness Benefits. Until now, life insurance and LTC insurance policies were purchased separately.

Tangible offers the policy holder some very unique options in their insurance planning. With a hybrid policy, you have insurance that reflects your different needs throughout your life. You have life insurance coverage with a level and guaranteed premium. Coverage starts at $5,000 and goes up to $1,000,000 in increments of $1,000, so you can choose the amount that best suits your individual needs. It also gives you payment options such as whole life, 20 years, paid up at 65, and the rates are affordable.

As well as having life insurance coverage, you have the option of combining Long Term Care coverage. By having this hybrid policy, should the need arise; your policy can be converted to suit your changing needs. By having this plan, you can avoid the traditionally more expensive LTC rates, as this plan only converts if and when needed. The rates are leveled and guaranteed, so you can avoid purchasing a separate LTC policy with rates that are subject to being raised. If you suddenly find yourself needing LTC, you can convert either 2 or 5% of the initial amount. Benefits are paid monthly and are tax-free. Critical Illness coverage can also be purchased with this policy, thereby covering every possibility that may occur in your lifetime.

There are some health questions needed in order to be eligible for this type of coverage. If you currently suffer from such conditions as HIV/AIDS, Alzheimer's disease, Angina, have suffered a stroke and/or heart attack, you are not eligible. Be advised as well that for people with a family history of certain genetic hereditary conditions, you may still qualify for these valuable benefits, at an adjusted premium. Please call Life-Quotes.ca for more information, or consult with a broker to see if this coverage is right for you.

As parents get older, circumstances can sometimes be reversed, and the children assume the care of their parent(s). Loss of a spouse, health concerns and/or advanced age are factors that can affect your parent(s) independence. This role reversal can be a difficult transition for both the parent and the child. However, with open communication and patience, this transition period can be made less difficult.

An issue that can be difficult to discuss with your parent(s) is their financial status. However, in case of sudden death or illness, you need to be aware of insurance policies, bank accounts, etc. If you need to talk to your parent(s) about their finances, here are 5 questions you should ask them in order to obtain the information you need.

Ask for a complete and thorough list of all their assets. Besides the obvious assets, such as a home, cottage and/or vehicles, you need to know exactly what their assets are. This includes bank accounts, real estate investments, pensions, RRSP's, etc. Get copies of all their financial documents, and keep them together in a file folder. In case of illness or death, you will need to have access to these documents.

What are your parents total liabilities? You need to be aware of any current debts that they owe. This is also a good time to discuss different finance options, such as debt consolidation. If they have co-signed for another person's debt, make sure you obtain this information as well.

Are your parents going to need financial support in the future? Realistically look at their income from pensions and/or savings. Will this be enough to support them, and for how long? How much income is generated from their investments? If your parent(s) have not managed to adequately save enough, this is the time to talk to your sibling(s) or other family members about financial support. You may want to consult with a financial planner about investment options.

Do your parents have insurance coverage? Ask to see all current insurance policies your parents have. Health insurance is critical at this stage in life, as well as life insurance. This includes any policies that they may have from employee benefits, as well as any that they have purchased. Check to see what kind of coverage they have, and any terms and conditions of the policies. If they have term life coverage, check to see when this expires. If they do not have adequate coverage, this is the time to consult with your insurance broker and obtain the policy that is right for them. You also need to be aware of who is named as the beneficiary, and update this if necessary. Get copies of all insurance policies so you have access to the information if needed.

Discuss Power of Attorney. Although this can be a very sensitive topic, you need to discuss what will happen in case of sudden and/or prolonged illness. Talk to your parents about who they would like to take on this responsibility, as well as their wishes. Talk to them as well about their wishes in regards to a living will.

It is important to discuss these financial issues as soon as possible. By having a complete picture of your parents' financial status, you can make plans accordingly. If you discover that your parents don't have sufficient life insurance coverage, you may want to consider a Guaranteed Issue policy. There is no medical questionnaire and acceptance is guaranteed. This is beneficial for those who have current health issues. There is also Guaranteed Issue Health Insurance, for those who do not have coverage. This also does not require a medical exam. Health insurance is imperative for the elderly, as their risk for developing health problems increases. Talk to your parents and your insurance broker to ensure that they have adequate coverage.

The health problems associated with obesity are quickly rising, leaving Canadian healthcare facilities ill-equipped to deal with the issue. It is estimated that 11 million Canadians are overweight, with a half a million being morbidly obese. Statistics Canada has reported that 2 out of every 3 adults are overweight or obese. The obesity rate in children has tripled in the past 25 years.

Canadian clinics and hospitals are being overwhelmed with the volume of patients needing healthcare due to being obese. Experts are calling for a major infusion of money into the healthcare system in order to be able to deal with the added burden on clinics and hospitals. The effects of obesity on the healthcare system is rapidly rising, and could soon eclipse those of smoking. Being overweight or obese means an increased risk of serious diseases and/or conditions such as:

• Hypertension
• High blood pressure
• Coronary heart disease
• Diabetes
• Stroke
• Gallbladder disease
• Osteoarthritis
• Sleep apnea
• Respiratory problems
• Breast and colon cancer

For most Canadians, being overweight or obese is a reflection of the changes in society. The workforce is more technologically oriented, with more people sitting in front of a computer. For children, TV and video games have replaced more physical activities. This means more people are living a sedentary lifestyle. Hectic lifestyles make less time for exercise, with the added option of fast food/takeout food. Quite simply, Canadians need eat less and be more active.

Being overweight or obese can impact your life insurance rates. When applying for a life insurance policy, you will be asked about your health status. Higher health risks means higher premiums. As with smoking, behavior that has a negative impact on your health means you will not be eligible for the preferred health status.