52 ~ Wednesday, October 9, 1$91 - North Shore News A FRIEND retired recently at age 55 with an indexed pen- sion starting at $3,000 a month. He was amazed — and delighted — to discover his pension is worth half a million dollars. “I knew J had a good pension ~- after 35 years with the same employer I figure I deserved it! — but I would never have seen the pension as such a major asset,” he said. in other words, it would take about $500,000 to buy a pension for a 55-year-old man starting at $3,000 a month and indexed at 5% a year. The payout, of course, will be even greater. If he lives for 25 years {approximately his life ex- pectancy), he will collect $1,757,000 in current dollars over that period. David Chalmers, a retirement -income specialist with The Rogers Group, has developed a computer mode! to calculate pension values. “Perhaps you are trying to decide whether to join the pension pian at work or to take out your pension if you are leaving an employer,’ said Chalmers.. ‘‘If ‘you establish the value of your pension, you can then decide whether you could do betier on your own. “The value of a pension can be a major family asset to consider if there is a marriage breakdown. Or it can simply have a psyciiological value if you feel deprived because your pension membership meant - you couldn’t put much into an RRSP over the years.” Michael Grenby DOLLARS AND SENSE If the same 55-year-old man retires today with a straight, non- indexed $3,000 monthly pension, it has a ‘“‘repiacement value” of. ‘only $320,000. Or if you are a man retiring at 65, the $3,000 monthly vension plan with 5% indexing has a value today of $390,000; «vith no index- ing, its value drops to $270,000. Women, who have longer life expectancies, will find their pen- sions are worth more than those of their male counterparts. A 55-year-old woman, for ex- ample, who retires today with a | N. Shore Health holds holding local immunization clinics in October as part of the 1991-1992 program. influenza vaccine The vaccines are made up of inactivated components of A/ Taiwan, A/Beijing and B/ Panama flu strains. It is available free to people considered to be at greatest risk from influenza-related = com- plications: people of any age with chronic heart, Jung or kiiney disease, chronic medical conditions such as diabetes, cancer, anemia, immunodefi- ciency cr immunosuppression, people over 65 years of age, and children under doctor’s | { NORTH SHORE Health is flu vaccine clinics care for chronic medical condi- tions. Children and people under 65 must obtain a_ written prescription from a physician and bring it to the clinic. Drop-in clinics will be held: @ Wednesday, Oct. 16, 1:30 to 4 p.m., West Vancouver Seniors’ Activity Centre Auditorium, 695 - 21st St., West Vancouver. @ Wednesday, Grt. 23, 1:30 io 4 p.m., Capilano Mall Community Room A (second level), 925 Marine Dr., North Vancouver. For more information about the influenza vaccine program, call North Shore Health at 983-6800. Z Reduce Your Estate Taxes The greatest impediment to passing property from one generation to the next is tax. Find out how to: e Preserve your estate ® Reduce the ultimate tax ~ Paul Milley B.Sc. C.1.0., CALC. liability 688-7208 “Advice is only as good as the person you ask ZLOTNIK, LAMB & COMPANY Estate Planning caitd Retirement Spectilists 1200 Park Ple Vancouver, B. 666 Burrard Street VeaC 2X5 (604)688-7208 ‘Toll Free Line t-800-663-3171 USINESS S can maximize tax savings $3,000 monthly pension indexed at 5% has a pension worth $560,000 (compared with $500,000 for the man). Without indcaing, the pen- sion is worth $340,000 (vs. $320,000). Chalmers based the figures in his computer model on a long- term interest rate of 10% a year. And his calculations assume a pension with no survivor benefit. If interest rates are less than the 10% Chalmers used in these cal- culations, it will take more money to produce the same pension. If rates are more than 10%, the pen- sion will have a lower value. Chalmers’ figures not only point out the value of a pension plan but also dramatize just how much you need to do on your own to provide for your retirement if you don’t have {or belong to) a pension plan. Relying only on the Canada Pension Plan and Old Age Security pensions will result in a very lean retirement. So if you don’t belong to a pension plan (although if you are in a high tax bracket and especial- ly if you own your business, check out the new individual pension plans), you should: my @ Make maximum RRSP con- tributiovs. Some people are skep- ticzi of the registered retirement savings plan program. They expect higher tax brackets in the future, as Ottawa struggles to pay down its debts. And they worry about more restrictions on RRSP withdrawals. Those are valid concerns, but unless you have a better approach (see the following item), use RRSPs to maximize tax savings now and tax-free growth of your investments. © Develop a non-RRSP investment program in (typically) the stock market, real estate and/or a business. With hard work, sharp skills, careful tax planning and some lucky breaks, you could end up with more capital than follow- ing the RRSP route. Of course, you could also maximize both RRSP and non-RRSP _invest- ments. « Plan to work until you die, probably in a part-time capacity after you retire. That. can te a viable alternative — as long as your spirits and health (and the job market) co-operate. Finally, if you are 65 and have Let the consumers of the North Shore see what you have to offer them this fall. The Fall Car Care Guide provides you with an effective means of reaching thousands of potenfial customers with your product or service. no piivate pension income, be sure to use RRSP or non-RRSP funds to create at least $1,000 a year of income that qualifies for the $1,000 pension income amount (CPP and OAS don’t qualify) — so you can claim the resulting credit and save about $270 tax a year. Mike Grenby is a North Shore-based cclumnist and in- dependent financial adviser who works with individuals; he will answer your questions as space allows -- write to him c/o The North Shore News, 1139 Lons- dale, North Vancouver V7M 2H4, Boost your fall sales and get your share of the $307,397 that is spent every day on automotive products and services in North and West Vancouver. All editorial and pictorial will focus ov Fall and Winter car care, products and services. _News readers will be informed of the Fait Car Care Guide by way of promotional advertising to enhance readership. For more information on how you can participate, contact Garry Crossiey 900-0511 FALL GAR CARE GUIDE Deadiine: Fri., October 78 issue Date: Fri. Geiober 25 Petar Kvamstrom 2986-6222