Page 21 - The Game November 2006

Canada’s Thoroughbred Racing Newspaper The Game, November 2006 21
Get Tied On
with Chaplain Shawn
Recently, we’ve seen a lot of wet weather here in Ontario, specifically at Woodbine and Fort Erie. Fort Erie received a horrific snowstorm October13 that knocked much of Buffalo and the Niagara region for a loop. The mild weather that followed melted the massive amounts of already wet snow, which led to flooding of an overtaxed sewer system. In the third week of October, 30,000 homes in Buffalo were still without power and as I drove through Fort Erie on the 20th, it looked like a war zone.
Here at Woodbine, the precipitation created a deluge of comments from many different people as we approached International weekend. Usually they’re in response to the anticipated, yet hated announcement that “we’re off the turf today”.
“It always rains when I enter.”
“I’ve entered five times and been off the turf each time.”
“It must be International weekend - all we get is rain.”
“We never used to train when it rained - I hate Polytrack!”
These are the comments that I hear floating throughout the backstretch.
Have we forgotten that we’re not immune to what happens in this world? I’m always amazed at how much traffic is on the QEW when I come back from Fort Erie, oh say, around rush hour. Although I get frustrated, I somehow convince myself that next time the volume of cars will be less and the accidents fewer - as if that’s ever going to happen! October in Ontario brings a preview of winter, a foreboding of grimmer things to come, yet we continue to act as if it’s July - we’re shocked that it would be cold and wet while we’re trying to conduct our business as usual. “Rain - what’s the big deal?” is what people would say in B.C.
Everything God created has its opposite: dark/light, hot/cold, evil/good - you get the idea. We need opposites so we can appreciate something when we don’t have it. Warm sunshine feels so much better after a few dreary, cloudy days. Somewhere on this planet is a climate that’s a direct contrast to ours. While bemoaning the weather, I came across a story from Australia that gives perspective to our soggy experience. They are finishing the first year of the worst drought in 100 years. Things are so bad for their farmers that there is one suicide every four days. It is the bleakest time the agricultural industry has ever faced. They would probably kill for some rain.
Chapter one, verse six of Peter’s first letter says “In this you rejoice greatly, though now for a little while, if need be, you have been grieved by various trials”. The trial Peter was addressing was the threats of death to the new Christian church. The trials we go through today, although they too will pass, seem minuscule in comparison to the threat of death or the thought that taking one’s own life is the only alternative to a seemingly impossible situation.
Those that don’t know, and those that don’t know that they don’t know
MANAGING YOUR MONEY
With Rick Debattista
Canada like most other industrialized countries faces a rapidly growing population of retirees who will require a sufficient amount of income to see them through their retirement years. With the advancements in medicine people are living longer than they did as little as 30 years ago. Statistics Canada projects that by 2041, people aged 65 and older will double to approximately 10 million.
Now you may be thinking “what’s this got to do with me?”
Read on and hopefully I can shed some light on how this projection reflects on all of us.
Many Canadians understand that they should put away some kind of nest egg for retirement, however the majority do not know what is required to obtain a secured income that will last them their lifetime.
We can put people into 2 categories:
Those that don’t know, and those that don’t know that they don’t know.
We as a nation are on the verge of experiencing an expansion of our retirement population. Ten million baby boomers born between 1946 and 1965 will shortly be entering retirement. This year the first wave will have turned 60.
Canada Revenue Agency (CRA) already reports that 45% of Canadians retire under the poverty line. That’s one in two Canadians who haven’t planned or didn’t know that Canada Pension does not pay enough to maintain the lifestyle that you have become accustomed to during your working years. The poverty line is considered to be $19,000 per annum and CRA is reporting paying out an average of $12,000 per year to 45% of retirees.
The good news is that more and more Canadians are realizing that they need to shoulder the burden of their retirement and security. With less than 40% of Canadians covered by an employer pension plan, society is stepping up to the plate to watch over themselves through retirement and savings instruments such as RRSP’s, annuities and mutual fund investments.
What they don’t know is the amount that they have to save, and what that same amount will be worth when they retire.
Inflation takes its toll on our worth. So if you consider that a dollar in 1950 is now worth $0.12 what will the dollars you put away today be worth when you retire?
The inflation rate, which is the long term tendency of money to lose purchasing power, can have a serious
negative effect on retirement income. Inflation, in other words, is normal and will always be a factor. The question is, did you know or consider this in you financial plan? or do you even have a financial plan?
If you are one of those people who went to the bank and started an RSP (Retirement Savings Plan), and have been sporadically putting in money....Do you have a written retirement plan to go along with it? The Strategic Council found that only 29% of retirees have a written financial plan and many who do have plans failed to include issues such as inflation. Most people simply play it by ear at a significant risk to their financial health.
You need to plan for the likelihood that you will live longer. The hope of living 20 to 40 years past the retirement age is becoming more of a reality every day thanks to modern medical and scientific advancements. Without proper planning, a longer than expected life could easily result in individuals outliving their savings.
Another thing I feel we should touch on, Health care expenses. In Canada we are fortunate to have access to a health care system. Though costs to this system have significantly risen over the years. Many people are not fully aware of how the health system works or what they are covered for at different stages of life.
Government insurance plans for seniors that retire at age 65 cover only basic needs...doctor visits, most but not all prescription drugs, hospital in patient services and only part of the cost of long term care. If a patient receives drug therapy not covered by their government plan then those persons private insurance will have to pay. There is also an eligibility criterion which comes into play such as age, income, level of illness or disability which determines what and how much the individual will receive.
A 2005 Reid survey found that 49% of Canadians do not have a financial plan to deal with critical illness of their own or that of a family member. Insurance com- panies are now offering products that can deal with critical illness, and provide long term care. Other examples of growing specialized health care products include cosmetic surgery, specialized dental, per- sonalized health service plans, and home renovation insurance or specialized devices for those with disabilities.
My goal here is to shed some light into the dark corners of what could be, but
doesn’t have to be. Keep in mind that, a baby boomer born in 1948 who is eligible for CPP can expect a monthly payment of $580 if retiring at age 60, $829/month on retirement at age 65, or if the same retiree worked until the age of 70, they could accumulate $1077/month.
Though CPP and old age security are adjusted to inflation, once you start to draw, there is no flexibility and the pay- ment pattern is set for life. You can take action now regardless of your age by reassessing your situation, putting a plan into place and building your worth. As little as $25/week, can go a long way in building your wealth through an investment medium such as a diversified RSP and the power of compounded interest.
I hope I have shed some light on how important it is to address the planning for life income rather than retirement income. To summarize, here are the points you should be paying attention to:
• Longevity risk – living beyond life expectancy.
• Inflation risk – losing value on savings due to the rising cost of living.
• Withdrawal risk – drawing down retirement saving to rapidly
• Health care – not having enough money to cover the cost of health-related expenses.
Remember...knowledge is power. If you have any questions or require further information please feel free to contact me.
Written by, Rick Debattista, Financial Consultant (519) 938-9900, toll free (888) 771- 2488
rick.debattista@investorsgroup.com
This column is presented as a general source of information only and is not intended as a solicitation to buy or sell investments, nor is it intended to provide professional advice including, without limitation, investment, financial, legal, accounting or tax advice. For more infor- mation on this topic or on any other investment or financial matters, please contact your Investors Group Consultant. Insurance products and services are dis- tributed by I.G. Insurance Services Inc. (in Quebec - a Financial Services Firm). Insurance licence sponsored by The Great-West Life Assurance Company out- side of Quebec
Did You Know...
That Sam-Son Farms was leading owner by earnings in North America for the week of October 15 to 21 with 3 wins in
9 starts and earnings of $214,922.
Bruno Schickedanz was North America’s leading owner by
number of wins for the week of October 22 to 28. Bruno’s horses won 8 out of 20 starts with earnings totalling $78,283. The leading money earner that week was Biblical Times ($23,944).
Daniel David Reaches Milestone
Jockey Daniel David earned his 1000th career win on Sunday, September 24 at Fort Erie aboard Son of the North in a 1 3/4 length victory. Since 1984 David’s mounts have earned close to $16 million. Daniel will likely finish fourth in jockeys standings this year at Fort Erie with 48 wins and $599,263 in earnings (as of Oct 28).