Pian your strategies for financial independence FINANCIAL independence can prove expensive. But there are ways to lower that cost. Michael Grenby DOLLARS AND SENSE ‘*Financial independence sug- gests that you have enough money so you no longer have to work for a living,” says John Beaton in the fiist issue of Beaton on Financial Planning. ‘‘Being financially in- dependent means you don’t actu- ally have to quit work, but simply be able to if you choose.” Federated Press, which pro- duces a series of publications on executive compcasation, taxation and retirement (for details, phone toll-free 1-800-363-0722), says Beaton’s quarterly newsletter is **devoted to personal financial Planning for executives,’ but much of the information relates to anybody who wants the most from his or her money. Financial independence can be expensive “and the cost uncer- tain,’' warned Beaton, who is an actuary and senior vice-president of The Alexander Conzulting Group. He gave an example. Let’s say a 50-year-old man wants to retire, financially in- dependent, and have an after-tax, inflation-indexed income of $50,000 a year. He can carn 10% on his in- vestments and he pays 40% tax. If inflation runs at 6% a year, he will need almost $1.5 mitlion in non-RRSP funds to provide $50,000 a year of constant pur- chasing power for the rest of his life. “Tf he can carn only 8% inter- est and inflation runs a: 7% (and his tax rate stays the same), then he’ll need capital of $2.2 million.’ Beaton said. If you dream of finaacial in- dependence, you must be prepared to spend less today to have more insome and independence tomor- row, **But make sure the tradeoff is worthwhile,” said Beaton. Enjov- ing life less today might be a high price to pay if financial in- dependence turns out not to be all you expected. Perhaps your health won't allow you to enjoy your money us Scleroderma THE SCLERODERNMIA Associa- tion (SA), a self-help and support network throughout B.C..is spon- soring the seventh Annual Public Scleroderma Seminar on Saturday, June IT at the Arthritis Centre, 895 West 10th Avenue, Vancouver, 10 a.m. to 2:30 p.m. The seminar is designed to bring tovether anyone interested in find- ing Out more about the disease. Ciuest speakers will address topics including ‘Coping With Chronic [llness’*, **Nutritian And much then as you could now — or perhaps you won’t even be around then. Spending time with your children is a one-time-only oppor- tunity; will you enjoy being with your grandchildren as much — assuming there are grandchildren? Perhaps working for money turns you on and is ‘‘your main source of challenge and fulfil- ment. Financial independence takes the edge off that motiva- tion,”’ said Beaton. “If you achieve financial in- dependence, you wil! need to find another way to maintain a sense of purpose.” Financial independence vives you the opportunity to make choices. But you should prepare for this opportunity or it can prove a burden. Beaton posed several questions you should answer now: Should you continue work after you achieve financial in- dependence? If you stop, what will you do? If you continue, should your standard of living change? If so, how? Will that af- fect your relationships with ex- isting friends, relatives and ac- quaintances? “Choices like these are what can make large lottery wins mixed blessings for the winners,’’ said Beaton. How can yon achieve financial independence sooner and more easily? Beaton proaches: * Control further increases in your standard of living: the more you earn — and spend — before you retire, the higher a standard of living you are iikely to want after you retire. And, said Beaton, thai will be expensive: ‘For every additional $5,000 a year of income the man in our earlier example wants, he will need another $150,000 or $220,000 in capital.” ® Reduce your standard of liv- ing so you won't need as much income to become financially in- dependent. “This can be difficult — but it is possible if your tifestyle now is driven by the value systems of your peers rather than your own,”” said Beaton. * Modify your objective. Earn income from part-time work to supplement the income from your suggests several ap- savings, If vou could earn $25,000 after-tax with cost-of-living in- creases (O maintain your purchas- ing power, you’d need to have on- ly half the savings amounts men- tioned earlier and could retire sooner. ® Use tax planning, investment vehicles and pension pians to the best advantage. Saving inside an RRSP or pension plan, for exam- ple. can usually build up funds for financial! independence more quickly than investing outside those tax shelters. “Sull,"’ said Beaton, **controll- group meets The tmmune Stytenv’ and "Un- derstanding Raynaud's Phename- non In Scleroderma.” This year tunch is a brown bag affair, with) fruit, desserts and beverages supplied free of charge. Scleroderma is a crippling and painful disorder that can develop tegardless of ave or sex, The ex- Perience can be bewildering for patients who don't have the com- fort and support of a) self-help network, say seminar organizers. For more information call 940- 0960 or S8ST-17T78S, ing your income needs can be as powerful a way of accelerating fi- nancial independence as controll- ing {taaes, investments and pen- sions."” Mike Grenby is a Vancouver- based columnist and independent financial adviser who warks with individuals: he will answer your questions as space allows in his column — write to him c/o North Shore News, 1139 Lonsdale, North Vancouver V7M 2H4. @ LEGAL FEE PACKAGE Gulf and Fraser is offering a residential mortgage “Legal Fee Package” exclusive to cur members. & NO TRANSFER FEE Gulf and Fraser has a “No Transfer Fee” policy for transferring your residential mortgage to Gulf and Fraser Fishermen's Credit Union from any other financial institution. m PRE-PAYMENT FLEXIBILITY We make it possible to pay off your mort- gage sooner and save you thousands of dollars. Weekly, bi-weekly along with semi-monthly and monthly payment schedules are ava:'able to you. 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