|
Continued from page 1...
 |
| With the end of her 28-year marriage, Dawn
was "thrown into the world" and
says she needs to "learn the ropes" financially. |
"That in my mind should be one of the first
things on the list she could attend to," says Adrian
Mastracci of KCM Wealth
Management in Vancouver.
He says Dawn shouldn't worry about dipping into
her nest egg to improve her skills: "She
will also improve the retirement that she can
provide for herself."
"If the teaching is not providing enough
employment, she should explore a second job which
will provide cash flow," agreed Lenore Davis.
The planners urge her to look into her pension
options.
Ms. Davis says Dawn should investigate whether
her ex-spouse has a private pension plan that
she might be able to access.
It's also possible she is entitled to some of
his Canada Pension Plan credits.
Other government plans that she could benefit
from include Old Age Security and possibly, the
Guaranteed Income Supplement.
Another thing that should be high on Dawn's
list is setting some priorities: self-improvement,
her son's education, buying real estate, her
car?
While she's doing that, Ms. Aronovitch suggests
that she go through her expenses.
For example, Dawn spends money regularly on
restaurants, dry cleaning, magazine subscriptions,
fitness classes and long-distance telephone calls.
She also gives 10% of her income to charity.
"I think it might not be a bad exercise
for her to take a good hard look at what she
is spending her money on and see where she might
be able to pare down," Ms. Aronovitch says.
"Otherwise she ends up in this vicious
cycle of 'I don't have enough income, I'm going
to draw down on my investments, if I draw down
on my investments I may not have enough when
I retire.'
"The biggest concern I have," she
says, "is this $16,000 dental bill which
is a huge chunk of money considering her level
of income."
Dawn has budgeted between $200 to $250 a month
to cover her upcoming dental expenses.
Ms. Aronovitch wonders if there is any way some
of the work can be put off until a later date
when more money is available.
As for the condominium, none of the three experts
think it's in the cards for Dawn at this time.
Vancouver has the highest average home price
in the country. Besides any barrier the actual
cost of a condominium in such a premium market
might pose, neither Mr. Aronovitch, Mr. Mastracci
nor Ms. Davis thinks Dawn would quality for a
mortgage.
Plus she doesn't want to be cash-poor, says
Mr. Mastracci. "She's got some other things
she's got to deal with."
The news isn't much better, at least from Ms.
Aronovitch's and Ms. Davis's point of view, where
funding her son's education is concerned.
Ms. Davis calls it a "pipe dream" unless
she can get more income. Says Ms. Aronovitch: "It's
nice to be able to do that. But where is the
money going to come from?"
Mr. Mastracci agrees she can't afford it. But
he takes a softer approach to Dawn's desire to
help her son.
"There comes a day when your son or daughter
says, 'hey mom or dad I need some money for tuition.'
Chances are you're going to dip into cash, you're
going to do whatever it takes to help out that
child. It's not a question of whether she can
afford it, it's a question of whether she wants
to or not. If she wants to, she will."
Where her investments are concerned he thinks
the best course of action is to keep things simple.
Both Mr. Mastracci and Ms. Aronovitch like Dawn's
choice of preferred shares and think she should
keep them. However, they're not so upbeat about
the income trusts.
"I would suggest some caution with income
trusts. They seem to be very popular these days
because of the fact they reportedly have high
yields. There are some good income trusts out
there but there are also some that might be a
bit wobbly and might cut distribution," Ms.
Aronovitch says.
"If she's relying on them for income she
should take a hard look at what she's got."
The $100,000 in term deposit: "Keep it
simple and keep it in another term deposit. Leave
it in something that was readily available because
she needs flexibility," Mr. Mastracci says.
For the term deposit, if Dawn wants income,
Ms. Aronovitch suggests she ladder her investments
-- that is, break up the $100,000 into $20,000
increments and stagger when each bundle of money
comes due. Then she can take out the interest
on a quarterly basis.
Because Dawn earns so little money, she shouldn't
worry about RRSPs or tax planning at this stage.
"What would be important to me would be
to elevate skills to get a bigger income. That's
number one. If I can do that, a lot of other
things fall in to place. If I can't do that I'm
always going to be stuck," Mr. Mastracci
says.
|
