Most people think of retirement and investment planning as trying to generate the greatest rate of return during the “accumulation” phase – the period that corresponds to your working life. “However, the far more challenging stage is the “distribution” phase which corresponds to your actual retirement. In this phase, investors’ priorities shift from maximizing returns to capital preservation and protecting your hard-earned savings because you can no longer replace it,” CERTIFIED FINANCIAL PLANNER, George Fiotakis says.
“During the distribution phase, effective asset allocation is necessary to ensure capital preservation. Furthermore, investors should consider proper succession and estate planning. Part of this process, is the identification of who will look after their estate after they are gone so as to avoid family squabbles. Tax implications, an essential and often overlooked part of retirement planning, must also be planned for. This is where a good Financial Advisor earns his or her keep.”
With over 20 years’ experience as a Financial Advisor, George Fiotakis, helps clients live their dreams through the application of a wide array of services and advice ranging from investment and portfolio recommendations to advice on estate planning, tax planning, insurance, and debt consolidation. But, his true passion and specialization is retirement planning.
It’s Not How Much Retirement Income You GET, It’s How Much Taxable Retirement Income You KEEP
“There is a very important distinction between the two and not getting it right could make a huge difference in the amount of tax you pay, how much income you live on in retirement, and ultimately, how much of an estate you leave behind to your heirs.
“First, there are the obvious retirement benefits of smart tax planning in retirement such as (1) lowering your tax bracket or (2) reducing, or eliminating, your Old Age Security claw backs. Spousal income splitting and the use of TFSAs certainly help,” George explains.
According to George, if an investor gets really good at reducing their taxable retirement income, it opens the door to a wide variety of wonderful benefits. Suddenly, an investor can gain access to the Guaranteed Income Supplement, the Allowance, and the Allowance for Survivor. Ontario residents can also access greater Trillium benefits, GST rebates, the Ontario Senior Home Owner’s Property Tax Grant as well as municipal property tax grants and deferrals.
There are also hydro and water bill rebates, public transit credits, free tax preparation, and a recently announced free dental services for low income Ontario seniors. According to George, many of these programs require the individual to apply for them and access to them is based on lowering your taxable income.
RRIFs and pension plans can obviously hinder opportunities to qualify for such benefits. “That is why everyone’s retirement scenario is different and why, in some cases, front loading RRSP withdrawals, or conversely, deferring CPP and OAS payments, may make sense. While not conventional thinking for most investors, it may allow you to obtain benefits, even for a few years, that you might otherwise not be able to get,” George explains.
Also, many retirees don’t have work-related pension plans and may even have new-found investment assets for retirement because they have downsized their home. Structuring these assets with tax considerations in mind is key.
“While certain investments are better than others in this case, mutual funds can play a significant role. But, I’m specifically talking about mutual fund corporate class structures. These financial instruments can convert income to capital gains. This means there may be no Income/Foreign Income to report, which will be a huge advantage. Moreover, dividends and capital gain distributions are often very small, depending on the individual class structure.”
“An often overlooked advantage is the utilization of “return of capital” distributions which can defer your tax bill and may make retirement income streams extremely tax efficient. This is a particularly important feature because retirees need income and potentially a lot of it. This income better be tax efficient or there will be much less within which to live and play.”
Replicating TFSAs, Except Now on a Much Grander Scale
George believes the high cost of mutual funds often make them an overlooked option. Although cost is definitely a legitimate concern, George believes that the key is to avoid the high costs of mutual funds by using ETF-based funds or High Net Worth Private Pools in a class structure. Both of these can offer significant savings on MERs. Today, many “high net worth” financial offerings are starting at much lower entry points than even five years ago which means that many more people can ultimately get in on the savings.”
Does George’s philosophy and approach get results? Yes, according to client, Barb Buchak, “As much as "us boomers" don't like to think that we are aging, retirement does eventually sneak up on you! Luckily a friend recommended George Fiotakis, and over the past few years, he has provided me with invaluable advice for planning my financial future. George really cares about my individual needs, he listens, is accessible and doesn't hesitate to share his time and knowledge to educate and counsel me on the tax benefits, programs and investment options available. Thank you George for helping me move into my golden years with confidence!"
Client David Wood agrees. “Your knowledge and foresight have saved me from falling for and into financial situations that could have been disastrous. I also appreciate the help and advice you've given to Adam and Lynne in developing their increasing portfolios. Thank you again for everything. I consider you not only as my financial advisor but also as a valued friend.”
Up Close & Personal
George’s financial and educational designations include the Certified Financial Planning designation from the Financial Planners Standards Council, a Bachelor’s Degree in Economics and Public Administration from the University of Western Ontario, the Professional Financial Planner and the Canadian Securities and Wealth Management Certification from the Canadian Securities Institute, Level II Life Insurance License designation as well as Mortgage Brokering certification.
George is ably assisted by his wife, Lorraine, a Professional Engineer. The couple has two children in University and are looking forward to travelling more and to having new life adventures. They are very proud of their daughter, Lauren, who is studying Law at Northwestern University in Chicago and their son, Ryan, who is studying Business at Wilfred Laurier University. Hunter, the dog, is studying squirrels and ensures his humans remain focused on what’s important – long walks in the park!
As a last word, George says, “People are living longer than ever, and are retiring for many more years than their parents and grandparents. Now more than ever, proper retirement planning is essential for a long and happy retirement. Outliving your assets is a very real concern. But proper planning requires recognition of risk tolerances, appropriate asset allocation, an appreciation of capital preservation, and perhaps most importantly, a recognition of the tax implications of retirement planning and the ability to maximize after tax retirement income. Your future may very well depend on it.”
This article has been written by Suzen Fromstein, APR, and is based on a personal interview of George Fiotakis, CFP. It is provided as a general source of information and is intended for Canadian residents only. The views and opinions expressed by Mr. Fiotakis do not necessarily reflect those of IPC Investment Corporation.
Suzen Fromstein is the author of Suits and Ladders, Ten Proven Ways to Keep Your Job Safe - with a few jokes thrown in. Suits and Ladders was an Amazon Best Selling Book in the Career Guides C
GEORGE FIOTAKIS, CFP® Certified Financial Planner®
One Yonge Street, Suite 1801
Toronto, ON M5E 1W7