Newsletter February 2019 (1)

Recent news in financial sector and more:

1. Prime Rate remained unchanged in January. Should we expect an increase in the nearest future?
2. Changes to pension program CPP (Canada Pension plan) that affect everybody.
3. Government increased the TFSA contribution limit by $6,000 in 2019.
4. RRSP Season.
5. At the very end of 2018 I passed an exam and now I am a certified Elder Planning Counsellor.
6. What happened to me in 2004-2005 and how it reflected on my life in 2018.

In more details:

1. Prime Rate remained unchanged in January. Should we expect an increase in the nearest future?

Central Bank of Canada again kept the overnight lending rate unchanged and as a result Prime Rate also did not change. Let’s see what may happen next and what the experts are saying.
“Bank of Canada Expected to Ease on Rate Hikes” – an article with this title was posted in Financial Post on January 9th, 2019.
“BoC Path Less Certain” – Financial Post, January 10th, 2019.
“November GDP Figures Support Rate Pause” – Financial Post, February 1st, 2019.
Current national economic state, oil prices, real estate market and world environment… According to experts, increase in the overnight lending rate and Prime Rate is likely postponed for quite some time, and there is certainly no expectation of an increase in near months. Some experts even agree that there will be no more rate hikes in 2019.
The fixed rate has decreased recently and has become attractive again.

2. Changes to pension program CPP (Canada Pension plan) that affect everybody.

Starting in 2019 Government pension program CPP (Canada Pension Plan) will have big changes. Our deductions into this program will increase. Amount of future pension will also be increased and there will be changes in how it is calculated. By the next newsletter I will provide information on our website under a separate category, as this is important. For now I will say, as of 2019 our deductions into the pension plan will increase from 4.95% to 5.1%. The same amount will be contributed by your employer. Up to 2019 deductions for future pensions were a total of 9.9%, now the number will increase to 10.2%.
By 2020 the deduction will increase to 5.25% of the earnings, and in total with the contribution from the employer it will be 10.5%. Deductions are calculated as a percent on the difference between your earnings and $3,500 but not above $57,400.
In 2021 the deductions will be 5.45% (total of 10.90%).
In 2022 – 5.70% (total of 11.40%).
Starting in 2023 and beyond, the deductions will be 5.95% (11.90%).

3. Government increased the TFSA contribution limit by $6,000 in 2019.

Contribution limit on a very beneficial program TFSA (Tax Free Savings Account) in 2019 has been increased from $5,500 to $6,000. As of 2019 your total contribution to TFSA can be $63,500. To find out more on how to contribute to TFSA you visit the following link https://www.totrov.com/en/tax-free-savings-account-en/.
Manulife Bank offers 3% interest on all new contributions to TFSA or RRSP made prior to March 1st, 2019. This is an absolutely open account, the money is not locked in. Up to the end of April your money will be earning higher interest. You can open such account without visiting our office, we can send an application by e-mail.

4. RRSP Season

RRSP season is in effect. If you are planning to use this program to decrease your taxes, you have to do so prior to March 1st. Not in all situations RRSP is beneficial, sometimes TFSA (Tax Free Savings Account) is more attractive. In order to understand what suits you best – RRSP or TFSA, it is best to consult a specialist, and I am always available to analyze each of these options.
If anybody you know is planning to buy their first property, they should pay attention to the HBP (Home Buyers’ Plan) program. To find out more about contributing, withdrawing and returning of the funds using First HBP visit the following link https://www.totrov.com/en/pension-rrsp-2/rrsp-hbp/.

5. At the very end of 2018 I passed an exam and am now I am a certified Elder Planning Counsellor.

The course contained four topics. A separate book for each topic covers a variety of aspects of a person living beyond their 50s.
In order to better understand the questions that were raised and studied during the EPC course please read the following article on our website https://www.totrov.com/resources/articles/art-2019-02-1/.
How a meeting with a certified specialist can be useful to you?

Such specialist can always assist you with preparing for a strategy for retirement. It is very important to know:

• What pension will you have? How does pension get calculated with age, with years employed, pension from employer and is there an eligibility for social assistance in your situation?
• Should you open an RRSP program and when is it best to do so in your situation?
• Will the RRSP program intervene with receiving a full pension?
• When to withdraw money from RRSP program to pay less taxes and not lose social assistance?
• How to receive full pension with all supplements in the first few years after retirement at 65 if the Government has declined your request based on previous year’s income?
• How to increase your income during retirement if you have a property?
• Should something be done prior to turning 65? Often it is too late to start at 65.

6. What happened to me in 2004-2005 and how it reflected on my life in 2018.

Since this is a very private topic and can be educational for many, I decided to send out a separate letter dedicated just to this issue. You will receive a separate e-mail in the next 2-3 days and please read it. You can share this information with anybody you think may benefit from it.

As always we are here to assist you with these and other questions.

Serguei Totrov
Financial Advisor, CLU, EPC
Mortgage Broker, AMP
TOP – 75 Broker in Canada
in 2015, 2016, 2017, 2018
416-222-0533
www.totrov.com

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