Six things every educator should add to their financial plan

Educators Financial Group helps the education community with every piece of the puzzle

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There are many building blocks of a successful financial plan, and it can be difficult to create — and stick to — every block. For many, the choice between stocks and bonds and the arrangement of pensions and taxes can be daunting.

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Personalized and professional financial advice can help the education community manage its unique needs, challenges, and resources to create a viable strategy.

Lisa Raponi is a Certified Professional Financial Planner with Educators Financial Group® and has helped members of the education community manage their financial well-being for more than half of her 22-year career.

Raponi believes that good financial health begins with six fundamentals: budgeting and saving, investment planning, insurance and risk management, retirement, taxes and estate planning.

Budgeting, Savings and Emergency Funds

“Being part of the educational community offers unique benefits, which often have significant financial considerations,” says Raponi.

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For example, educators can usually take unpaid or deferred leave to accommodate life circumstances. But these absences have financial impacts and force members in education to save.

“If you’re used to a certain budget and you’re exploring those time off opportunities, you need to budget for that,” Raponi says.

Emergency funds, typically set up for job loss, temporary job interruptions, and unforeseen expenses, also remain vital for educators despite their perceived job stability. A potential problem is when educators are reassigned to other areas.

Raponi notes that school boards like Toronto run from Scarborough to Etobicoke and from North York to downtown. So if the school board is moving someone who has lived and worked in Scarborough all their life to Etobicoke, an emergency fund can mitigate the cost of moving the extra distance.

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Investment planning

Raponi remembers clients whose former financial planners advised them to make risky investments because of their strong pensions.

But Raponi thinks investment risk depends on the individual – not the career.

“If you’re comfortable with risk, we’ll build a portfolio for you that fits that risk tolerance,” says Raponi. “But if you’re not comfortable, we’ll build you a wallet that lets you sleep at night.”

Educators Financial Group believes that good financial health begins with six fundamental principles.  GETTY PICTURES
Educators Financial Group believes that good financial health begins with six fundamental principles. GETTY PICTURES

Insurance and risk management

Although Educators Financial Group does not sell insurance, they ensure that their clients understand its importance.

“We focus on education,” says Raponi. “We’re saying listen, look at your level of debt, look at your income replacement needs, so that when a client goes to talk to the insurance professionals, they have at least some information to provide to the insurer.”

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Raponi directs customers to Ontario Teachers’ Insurance Plan (OTIP) for home, travel, life and auto insurance.

Retirement and pensions

“Pension plans can provide a guaranteed level of income for the rest of your life,” says Raponi.

But Raponi still suggests that educators save outside of their pension. A solid nest egg allows retirees to do fun things in their golden years.

“Your pension may cover your bills back home, but it doesn’t necessarily cover overseas travel,” Raponi says.

And even if an educator’s pension looks like a gift, it’s important to remember that he contributes to the pension plan.

“Currently, the contributions are almost 12% of their salary depending on their income threshold, so they should be proud of the pension they contribute to,” Raponi says.

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Taxes, duties and taxes

Educators may face tax charges when saving and withdrawing from a Registered Retirement Savings Plan (RRSP). But a financial planner can suggest different strategies to help reduce these burdens.

“An RRSP should be liquidated the year you turn 71, after which you should start drawing from it regularly,” says Raponi.

This requirement can create problems for the education community whose income generally increases throughout retirement. Deferring income from an RRSP to their later years often results in increased taxation.

“I have a lot of conversations with clients about tax planning,” Raponi says. “We are exploring options to withdraw from RRSPs in the most tax-efficient way. »

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Educators Financial Group provides expert, personalized, personalized financial planning advice. GETTY PICTURES

Estates and inheritance transfers

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For Raponi clients, estate planning is all about minimizing taxes upon death. She also helps with other estate essentials, like discussing probate or naming a beneficiary.

An RRSP account can be transferred tax-free to a spouse on death. But when the money is given to someone else, half of it can go to taxes.

That’s why Raponi always offers a strategic discussion on which accounts to use for estate planning from a tax perspective.

“It’s the long conversations we have with customers on an ongoing basis,” Raponi explains. “They can be time-consuming, but they’re also very valuable and can save you thousands of dollars.”

Book a free consultation with a financial specialist from the Educators’ Financial Group and benefit from personalized and personalized financial planning advice to achieve your financial goals. To learn more, visit www.educatorsfinancialgroup.ca.

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And by December 31, 2022, meet with an advisor to discuss your financial plan for a chance to win $1,000.

Educators Financial Group has been offering financial planning and a wide selection of investment and loan products and services exclusively to education members and their families since 1975. It is this strong history that has allowed them to become the financial specialist of the education community – enabling educators to achieve their financial goals.

® Educators Financial Group is a registered trademark of Educators Financial Group Inc.

This story was created by content worksthe business content division of Postmedia, on behalf of Educators Financial Group.