Financial Planning For Canadian Business Owners

Jason talks to Aaron Hector, a private wealth advisor for CWB wealth. He is here to talk about old age security.

Episode Highlights:

• 1.09: Aaron is a financial planner. He works with CWB wealth, and the majority of his time is spent serving private clients and helping them out with their retirement planning and taxes.
• 1.55: Aaron has been one of the few who spent time writing about old age security topic that is an overlooked benefit compared to the Canada Pension Plan.
• 2.12: Old age security pension is a government pension. You need to be at least 65 years old to begin to receive it and it's for those who have residency within Canada, either current residency or former residency, you need to have lived in Canada for at least ten years after you are 18 years old, says Aaron. 
• 5.04: You get an extra .6 of a percent by choosing to postpone your starting point. If you start at age 66 instead of 65, you get an extra 7.2%, says Aaron. 
• 7.37: For every dollar above your net income exceeds, government will take away 15 cents of your old age security. Technically it is a recovery tax and people refer to this as a clawback, says Aaron. 
• 10.27: Aaron explains what are some of the ways that a family or couple or an individual can minimize their exposure to all these security paybacks?
• 12.13: For people who have their own corporations, especially for small businesses who don't have revenue over 500K, they are going to be paying dividends to themselves as a non-eligible dividend, says Aaron. 
• 17.06: If you have got a lot of health issues prior to making the decisions, then it's kind of hard to make decision for OAS, says Jason. 
• 18.13: For every year that you live, your life expectancy increases because you are part of the survivor pool.
• 19.42: Aaron talks about some of his better or favorite tricks or unique planning opportunities that are uncovered when it comes to deferring past 70.
• 20.26: The whole amount to the lump sum plus the ongoing monthly payments that you begin to receive after OAS is taxed in the year you get the money, says Aaron.
• 22.36: If you are at 71 and you forgot your OAS all the way through 70 and now you are going to apply retroactively, your one-year reach back is going to be at the age 70, says Aaron. 
• 28.23: The government did increase the amount payable to people of age 75 and older by roughly $80 roughly per month from October 2022 and this was the first meaningful change to OAS payments amount in very long time.

3 Key Points:

• Once your net income exceeds a certain threshold government begins to take away your old age security benefit and that threshold for the year 2022 has been set at $81,761 per person, says Aaron.
• Clawback is something that grinds people because there is a disproportional amount of time relative to the amount of dollars that can be saved spent on planning around all day security.
• If you think you are going to live to 75, don't postpone OAS, take it at 65 when it's on offer. If you think you're going to live to 90 you are probably wise to postpone it to 70.

Tweetable Quotes:

• "You need to have at least 10 years in Canada to qualify, but 40 to get the regular payment." – Aaron
• "Effective rates of tax are more important than marginal rates." - Aaron
• "You also have a one-off strategy around how to structure your estate in some cases, speak about that." - Jason

Resources Mentioned:

• Facebook – Jason Pereira's Facebook
• LinkedIn – Jason Pereira's LinkedIn
• https://www.linkedin.com/in/aaronhector/?originalSubdomain=ca
• https://www.cwbwealth.com/en