Episode 148: The Safest Retirement Plan in Canada? A Zero-Risk Solution To Cover 100% of Your Lifestyle Needs

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What if you could fund your Canadian retirement with zero volatility, zero fear, and still leave millions behind—without ever investing in any risk-on assets like the stock market, real estate or alternative assets?

Many Canadian incorporated business owners plan their financial journeys with the logical, numbers-based approach—aiming to maximize their rate of return through Canadian real estate, Canadian private equity, or the stock market. But as they move closer to retirement or major transitions, the emotional brain often kicks in and asks, “What if I just want to be certain I’m okay?” That’s exactly where many of our clients, like the one featured in this episode, end up: craving clarity and confidence that they’ll be financially secure even if they choose not to chase the next risk-on asset or feeling like they need to constantly be on the look-out for a big investment opportunity.

In this continuation of Episode 108, we unpack how an incorporated business owner whose Canadian retirement plan was structured to fund a high early cash value participating whole life policy to act as an investment opportunity fund is now shifting his planning gears to determine where he stands if he were to utilize only the ultra safe, risk-off permanent policy as the producer of tax free Canadian retirement cash flow with guarantees that you just don’t have with other traditional investments. We explore his “base case” Canadian retirement scenario—no extra investments, no risky plays—just a safe, scalable, tax-efficient income stream that carries zero emotional baggage and full peace of mind.

What You’ll Learn:

• Discover how leveraging a high cash value participating whole life policy can create a reliable, inflation-adjusted Canadian retirement income stream into your 90s and beyond.
• Understand how your “base case” plan can eliminate the need to chase returns, while still leaving a legacy behind for your estate.
• Learn how to turn retained earnings into your Canadian retirement safety net—tax-efficient, low risk, and fully liquid.

Press play now to find out how your participating whole life insurance policy alone could become the Canadian retirement plan you didn’t know you already had.

Resources:

• Ready to take a deep dive and learn how to generate personal tax free cash flow from your corporation? Enroll in our FREE masterclass here. 
• Book a Discovery Call with Kyle to review your corporate (or personal) wealth strategy to help you overcome your current struggle and take the next step in your Canadian Wealth Building Journey!
• Discover which phase of wealth creation you are in. Take our quick assessment and you’ll receive a custom wealth-building pathway that matches your phase and learn our CRA compliant tax optimized strategies. Take that assessment here.
• Dig into our Ultimate Investment Book List
• Follow/Connect with us on social media for daily posts and conversations about business, finance, and investment on LinkedIn, Instagram, Facebook [Kyle’s Profile, Our Business Page], TikTok and TwitterX. 
  

Calling All Canadian Incorporated Business Owners & Investors:

Consider reaching out to Kyle if you’ve been…

• …taking a salary with a goal of stuffing RRSPs;
• …investing inside your corporation without a passive income tax minimization strategy;
• …letting a large sum of liquid assets sit in low interest earning savings accounts;
• …investing corporate dollars into GICs, dividend stocks/funds, or other investments attracting corporate passive income taxes at greater than 50%; or,
• …wondering whether your current corporate wealth management strategy is optimal for your specific situation.

Achieving financial independence requires smart planning, especially when it comes to growing your net worth and generating passive income. We explore conservative leverage strategies such as the Smith Maneuver to convert non-tax deductible interest on your primary mortgage to tax deductible interest as well as conservative leveraged life insurance strategies including immediate financing arrangements (IFA). For business owners, navigating the complexities of corporate structures, tax implications, and investment strategies can feel overwhelming. From understanding capital gains rules to leveraging life insurance for wealth optimization, the right approach can transform your financial future. By aligning your strategy with tax-efficient tools, you can unlock the full potential of your business and investments, ensuring sustainable growth and long-term independence for a successful Canadian retirement plan.

Transcript:

Well, well, welcome. Hey, hey, there, Canadian wealth secret seekers. You’ve got Kyle for another episode of Canadian wealth secrets. And today we’re going to actually do a bit of a continuation. If you recall back in episode 108, was titled Smarter Canadian Tax Strategies for Corporate Retained Earnings, a Case Study. We dug into one of our Canadian business owner client scenarios where he had began funding a corporate-owned participating whole life policy

as an opportunity fund for a future commercial real estate purchase down the road. Well, today we’re going to be diving into one of the common situations or scenarios that many folks just like this individual client find themselves in after they put a policy in place, personally owned or corporately owned, where they begin to contemplate what happens if that opportunity fund was instead used to simply act.

as a base case for retirement income. So this one’s for all the entrepreneurs, the T for professionals out there and incorporated Canadians who are wondering, what if I don’t take on the risk on assets or opportunities like I had originally planned? What if I just fund this policy and live off of it comfortably, tax efficiently and without any sort of worry?

or issue? Is that possible? And what does that look like and sound like? So that’s what we’re going to dig into today. And we’re going to continue that case study with a bit of a part two episode. So here we go. Now, as we dig in here, what sparked this conversation or this episode, I should say, was actually a text message from this specific client who back in 108, we were talking about the scenario funded a policy, this policy, has about $300,000 of premium. Now these are $300,000 of retained earnings each year that this client had been sort of socking away in GICs. If you do recall, and he had sent a message along the intent here was, okay, instead of just putting it in GICs and waiting for the opportunity to purchase the building that he was already operating out of and leasing, he was thinking about funding a policy. And then when the time came,

they would be able to leverage the policy for this building purchase or at least utilize the policy for at minimum the down payment, but they could consider actually funding the entire purchase as well. In the shorter term or short to medium term, they were contemplating potentially utilizing cash value and leveraging cash value for

different types of investments could be private REITs where there’s cash flow coming back. Maybe it’s other alternative investments, or maybe there’s even a real estate joint ventures, for example, that might be available to them. So this is the text message I had received says, Kyle, quick question, if I had $3 million in cash value, and about $5 million of death benefit, can I withdraw based on the cash?

value or the death benefit. Now, right there, a lot of people are probably thinking, well, isn’t this something that we explore before we put a policy in place? And the answer is yes, we’ve had many conversations about this. But because it can be such a long time between all of the initial conversations and then when they do decide that they’re going to move forward with a plan, and then they actually apply for a policy, this can take sometimes three weeks, six weeks, it could be even longer depending

depends on how complex the scenario is or what time of year it is and so forth. Sometimes people can forget or all, you know, maybe just sort of lack confidence in what they had already understood to be true. So this is really important and we encourage all of our clients. We stay in touch with them, give them tips and tricks along the way, but making sure that they have an open line so they can reach out to go, okay, you know, remind me of this particular aspect because the reality is, that

In order for people to utilize this opportunity fund in the most efficient and effective way possible, really, you want to be a bit of an expert in it. But the problem is that you don’t have an entire lifetime to try to work this thing out and figure things out, right? So you’re trying to put this plan in place, and therefore, you’re sort of learning as you go. So my response was that you can only borrow against cash value, not death benefit. This is one of the benefits of utilizing

a permanent policy as a leverage tool is that you can never get yourself sort of in over your head. Whereas because the actual policy is worth more when we pass on than it is when we’re alive, meaning that this thing is actually going to grow or appreciate after death without any capital gains, right? So that’s a really important thing. Now you can typically access up to 90 % of the cash value from the insurer or

potentially 100 % from a third party lender. That’s very common to actually access 100 % of cash value. So when you retire, they came back to me and said, when I retire, if I have $3 million, say of cash value or $5 million of cash value, I can borrow up to that amount over time. And the idea would be that the death benefit would be large enough to cover the repayment and the interest. So

There’s some nuance here, right? Something to keep in mind is that the actual interest, especially if we’re talking about the interest from a third party lender, if it’s from the insurance company, they’ll just capitalize the interest. They’ll just keep track of it. And essentially, it’ll all get paid off at death. However, if we go to a third party lender, they’re likely going to want interest only payments monthly or annually or whatever the setup of that loan is going to look like and sound like.

However, that payment can be taken from the loan advance each and every year. Every year the cash value gets larger and therefore you have access to more cash value via a loan or through leverage. So that’s really important. So what we’re gonna do today is we’re actually gonna unpack and look at this scenario here because really his big question was sort of like, imagine a world where we go, set up this policy and the goal was that I would get a leverage

for investment opportunities and the investments are going to also help me with retirement. What if I like I changed my mind and I just sort of wanted zero volatility, zero fear, zero emotional baggage, and I just wanted peace of mind through predictability. That is what a policy can do for you. Now, in order to get those things, what you’re sacrificing is you’re sacrificing the rate of return, right? Like that is how this works, right? The less risk we take, the less return

we take, right? So for a lot of people, they go, well, you know, if I was to take money and I leveraged a policy, for example, or I took some of this money that, you know, I have sitting in my corporate bank account, and I was just going to put it right into the markets, that’s fine and dandy as long as you’re okay with a long time horizon. Typically, we’re looking at like a 20 year plus time horizon. When we’re talking about the stock market, why because over every 20 year period,

essentially since the stock market’s been around. So over 100 years, every 20-year period typically will get you an average of around 8 % or better if we look at 100 % equities. The problem is, as we shorten that timeline down, the less years that are involved in the sample size, the more volatile it gets. You might get big swings up, but you also might get big negative swings down. And that obviously lowers the average rate of return. And of course, it is

volatile and therefore there’s you know actually a sequence of returns risk that we introduce ourselves to so since this person is going to be buying a building within the next 10 years throwing it into the market for example might not be a great move so what he was doing was he was putting it in gics right seems safe seems logical but was losing half of the upside due to passive income taxes inside the corporation so

this is a much better option for him. And the goal was, hey, I’m gonna leverage and put it into other opportunities in the meantime. However, now he’s sort of thinking, wait a second, with all this risk, typically what happens is, we start, when we do our planning, we’re using our rational brain, right? We just look at the numbers, we see what’s logical, we see, you know, this makes sense, that makes sense, let’s do it, let’s put it in place. But then when we actually go to act on it,

So we put this policy in place and then you’re you have the power to use leverage and put it into investments. This is where the emotional side of your brain typically takes over. And this is where people start to think more about the downside, you know, and protecting themselves and thinking about this and going, well, if I know this tool is essentially guaranteed, right, I don’t have to worry about it going down. I know it’s not going to give me, you know,

Nvidia stock returns or it’s not going to give me equity returns. But what if like, it’s sort of like this idea of a base case is like, what if I did no other types of investing? What does that actually look like and sound like? And that’s what I’m hoping to answer for this individual client here today. But then also for all of you out there who might be thinking the same thing. If you’ve been contemplating the idea of permanent insurance and leverage strategies,

It all sounds great when we think about it rationally. But as soon as we actually go to do the work, this is where the safety really takes over. And this is one of the biggest benefits of using an insurance strategy at all. It’s easy to talk a big game and say, I’m going to go 100 % equities because if I run the numbers, it makes the most sense over the long term. 100 % accurate on that. The problem is how much of the money that you have access to are you willing to put into

those assets. So while your investments might be 100 % equities, your investment pile might be a lot smaller simply because you’re not willing to put all of your pile into the market, right? So when people do that, they’re usually they calculate like when I look at my investment account, my investment account is 100 % equities, but they don’t actually look at everything else they have, they don’t include the cash they have in their account or especially if they’re a business owner, when you have

a few hundred thousand most business owners we work with a lot of times have a couple hundred thousand or more in liquid assets because of the unknown in business, right? They don’t know if and when they might need it. So it’s sort of sitting there either doing nothing or getting taxed heavily at very low returns. And they might have a small investment portfolio to that’s 100 % equities. But actually, they’re not 100 % equities. If you actually look at it, a lot of times what ends up happening is they’re

50 50 like 50 % cash 50 % equities for example if you actually look at it from a bird’s eye view so what we want to do is we want to take a look here and go okay let’s pretend for a second let’s make sure that we take care of fear let’s take care of all this emotional baggage and let’s let’s just pretend that we did this which is not the optimal return thing to do but I often run these numbers for myself and my own retirement plan so that

any other investments I have are all bonus so that if I look at my account and it’s down quite a bit or if the real estate market takes another tumble like we’ve seen here over the last 18 months or so that it doesn’t matter that I’m going to be safe with my base case and I don’t have to worry about any sort of volatility or feeling fearful or anything like that. And then any other in risk I do take on is all bonus. It’s all gravy. And it will of course

grow my net worth overall as well. That’s how I choose to run my own portfolio, my family’s sort of pile that I’m trying to protect and grow over time so that I can maximize, you know, on a rational level, but then also on an emotional level. So I’m going to share the screen here. If you’re on, if you’re on YouTube with us, we’re getting more and more of you over on YouTube, which is great. Do us a favor, hit subscribe.

hit the notification bell and leave a comment so that we can continue to grow the channel more and more folks tend to like going over there because they like to see some of these examples. So up on the screen, what you’re going to see is a scenario. We’re going to look at the case for this particular client. Basically, the plan was funding for the next 10 years of about $300,000 into this policy. Now, keep in mind, this is fairly scalable. Okay, this individual is

53 years old when we put the policy in place. So things do change depending on age, but this person is you know, in their early 50s. And note that if 300,000 doesn’t apply to you’re going Holy smokes, that’s way too big, or maybe that’s too small for you, you can scale these numbers up and down. It’s fairly

typical, right? So for example, if we third these numbers, then we have $100,000 maximum funding, you could probably third the cash value third the death benefit and so forth. So in this particular case, we’re going to assume 100, a 10 year runway. We also had this individual wanted to backdate the policy. What that means is, is that we’re actually going to make it seem like the policy was put in force about one year ago. It’s actually a year less a day.

ago so that they can actually get two years of premium in now that allows you to jump to the second year in the table so it’s like they get two policy years out of the way they’re closer to the breakeven point at about year five ish and they’re closer to their offset point which usually is around year five according to dividend scales now we always try to aim for a 10 year or longer runway anyway just to be safe however that’s what this scenario looks like so this individual

has already funded two full years. Why? Well, they had a lot of money sitting in GICs, and they were losing a lot in taxation and passive income taxes. They still want it safe. They still want it liquid so that they can do something with it. But now they’re asking the question of, what if I just chose to do nothing? Right? The more we’ve explored options and ideas, they were like, I don’t really want, they don’t really want to buy real estate themselves.

They don’t really want to vet a JV deal with anybody out there. They don’t want to necessarily have to vet a private group that might be, you know, buying a multifamily building. Like there’s a lot of work to be done if we want to do these types of investing. So he’s sort of looking at it going like, what if I just didn’t do anything here? And we don’t even include his building purchase into this calculation. Where would I be if I just chose to take this super, super safe and conservative route again?

not advocating that everyone do this, but I do advocate that you at least see what would happen if you did it. This is what helps people sleep at night. And then it also allows you to decide how much risk do you want to take on for that upside. You don’t necessarily need to take on that risk, right? Life can be a whole lot simpler else or otherwise, right? In our pension episodes, for example, we reiterate the idea that

people love pensions, they want pensions. Pensions are very, very risk off, which means the returns aren’t great on pensions, but people love them and they want them. It’s all about security. It’s all about not having financial fear. So let’s see what that would look like for this particular individual. So you can see up on the page here, I did this a few different ways and I wanted to show you. First off, I usually show,

scenario. Now, these are assumptions that we’re gonna make. I’m gonna get rid of things that don’t really matter on our screen right now. and I’m gonna go ahead and I’m gonna go like this too. I’m gonna get rid of that for now as well. So, what you’re gonna see up on the screen is the funding for 10 straight years. You’ll notice that of course in the early years as you know, the cash value is not going to be equivalent to the amount of

premium that’s come in. There’s a little bit of opportunity, a startup cost, so to speak. By about year five, he’s put in 1.5 million and his cash value is now over. It is exceeding 1.5 million. This means if he goes to a third party lender, he should be able to access the full 100 % of cash value of about $1.55 million. Now, if you were to pass on, that would automatically

jump to $7.3 million of death benefit. You’re going to notice here the death benefits a little bit higher than typical. That’s because there’s actually a term policy on here. This is for early protection for him and his family, but that will fall off after year 10. So you’ll notice the death benefit drops down a little bit as it goes. So death benefit will continue to rise as he funds this policy. There will be a dip of a little less than 2 million after year 10. At year 10, he’s funded $3 million

into this policy. And remember, the goal was that this is an opportunity fund. It’s liquid if the business if he needs it for scaling the business, it’s liquid if he finds an opportunity that he wants to invest in. It’s liquid. When that building deal comes through, I think he had like a nine year runway for that building to come through due to some sort of severance issues and so forth. He was going to essentially do a option to buy

the building in a lease to own type option so that he can actually take over title in about nine years. So he’s got lots of cash value by then that he can use to buy that building. But he’s saying, let’s pretend that doesn’t happen. What will this look like? Tell me what retirement could look like. And I’m assuming that after 10 years, we stop funding. I’m going to get rid of the minimum premium required, which is about $77,000, $78,000 is the minimum.

Going to get rid of that for a second, because that’s not the assumptions we’re making here. And what you’re going to notice is that in year 11, there’s no more funding of premium. The 10-year convertible term rider will fall off on this particular case. And he’s looking at about $3.8 million. Now, again, this is not a comparison to if he took $300,000 and just put it in the stock market in 10 years if he was getting 8 % in the market, which we cannot guarantee.

But if he was then that number should be higher. You also have to pay capital gains on that when we do sell those values, right? So again, there’s give and take here. And of course, we need to make sure this money is here and accessible and liquid. So we’re looking at this just as a hey base case, what would this look like and sound like? He now has $8.3 million of death benefit and 5.6 million of that can be paid out tax free to the next shareholders upon death.

the remainder would be quote unquote stuck in the corporation that you could either run this again on another family member, this type of strategy, or you could actually pull it out and pay tax on that extra amount, which again, not the most logical thing to do, but it is possible. So what we’re gonna look at though is let’s assume that in 11 years he starts to pull, what could he pull and what’s that maximum amount that would last him to age 100? We’re gonna assume here an interest rate of 5%.

prime as of this recordings about 4.95. If you roll back about, you know, 12 months ago, we’ve been talking about this for quite some time that, you know, we were at essentially 20 year 30 year highs in terms of interest rates. So we’re anticipating that they were going to start falling. We’re anticipating they’re going to continue to fall from here. So we have 5 % down as the borrowing rate. Of course, that can vary over time, but note that your cash value would

likely vary with that as well. If we’re in high interest rate environments, it’s likely your cash value will be higher. If we’re in low interest rate environments, it’s likely that your cash value is going to be somewhere around here, potentially slightly lower if we stay low for even longer, which is probably not going to be the case typically. when we look at this, and again, these are assumptions I could pull, and I say this person, this individual, this client could pull, but 172

each year, you’ll notice a loan balance here. We’re gonna assume that the loan balance is including the cost of interest. This would be run slightly differently if it was done through a third party lender, we’d be paying that actual interest out of amount. So we’d be pulling a higher amount. However, as we look here, you can see that all the way through, he’s able to pull this 172 all the way to age 100.

from age sixty four so he’s able to pull this for about thirty seven years and he has not yet exceeded or exhausted all of the cash value in terms of a loan and they’re still going to be just short of a million dollars upon death if he died at age a hundred to not only wipe out the loan but then leave a bit of a legacy for the family so we’re looking at that scenario and the

taxable income if we assumed an average tax rate of about 30 % would be about $245,000. Okay. Now, first question that people usually do from here, I usually start here, but this isn’t enough for a full plan, right? We need to make sure we’re thinking about other things like, well, first of all, what are they pulling now? Like what are they pulling today for lifestyle? And I know this particular business owners only pulling about $100,000 as of today.

for lifestyle now why is that well that’s because they don’t want to pay a ton in taxes so that’s what they’ve been living off of so if we were to look at that and we were to use an inflation adjusted income. Let’s see what that would look like so again same tenure funding schedule on this particular policy. We have the same death benefit same cash value same starting point. And except I’m gonna start with.

the equivalent taxable income of $100,000 at the average tax rate of about 21 and change percent. That’s here in Ontario as of now, that’s about what you’d pay on that full 100,000. And therefore that means he needs about 78,000. Okay, so in year one of retirement, that’s about what we’re gonna get here. However, if we were look at this here, and if we were to actually,

start pulling that number and we were to inflate by 2 % per year. Just realizing this now, I haven’t been inflating this for the first 10. So forgive me for that. But you’ll get the idea here of what can be done. You’ll notice that you could pull this $100,000 equivalent of pre-tax dollars, which is about $78,000. And you can let it inflate at about 2%. And you’ll notice that if you live to age 100,

you’ll still be leaving about $8.2 million to your family. So why I’m showing that is you were going, okay, listen, if you kind of did what you were doing up to this point, you’re still going to have quite a bit left over by simply just funding the policy and not even doing anything else with cash value in the meantime, and then just start pulling this income. 

All right, but what we’re going to do now is we’re going to jump over here. We’re going to look at the same policy, same funding schedule, 10 years. And instead of just trying to look at what’s the maximum equivalent amount I can take out over the next, I think we had said, what was it, like 37 years or so until he had, and for about a 37 year runway, noting that for retirement plans, by the way, most people use a 30 year runway. So

We’re getting pretty extreme here. Like I like to over plan and that way clients are sort of being over delivered on this base case that we’re looking at. So what we’re gonna do instead is go, okay, well, if they’re pulling right now, this business owner’s pulling $100,000 of taxable income through dividends, salary, however they choose to do it, that’s equivalent to about $78,000 and change dollars of after-tax dollars. Now,

Once again, something to remind you about is that remember a lot of the costs that you might have now, you may no longer have, you may no longer have, right? So for example, some people may not have a mortgage anymore. So that’s again, money that you don’t need. Some people may be taking some of this money that they’re pulling out and they might be doing saving, investing, doing something with it in their tax-free savings or their RSP or something. So again, once you’re in the retirement stage, you’re probably not doing those things either.

your actual needs usually goes down. So for example, here’s a great example for educators in Ontario, typically educators and they just received a raise based on inflation and so forth over, you know, the last contract negotiations, educators at the top of the grid are earning somewhere around 110 to 120 in terms of what they earn now when they retire.

they’re earning somewhere around $60,000, like almost half. And that number will slowly inch up as well. It might be more like 65 or so on. So when we think about this, we’re actually doing, we’re trying to set people up here so that they have enough regardless as if their spending never changed, even though it’s probably going to go down and most people plan for retirement with less spending. Me, it’s not my style. I want to actually have equivalent spending or in a best case scenario, I have

better spending, right? I got more financial freedom. I have more opportunities to do the things that maybe I didn’t want to do or couldn’t do while I was in the busy stage of my life, my go go period of my life, children work, building businesses, all of those things. So here, what we’re going to do is we’re still going to keep that 100,000 that he’s pulling out. It is equivalent to about 78,600 today and after tax dollars. So you can see that here, you’ll note that I’m not

going to actually pull this money in the first 10 years, but you’ll notice that have actually inflating this by 2 % every year because keep in mind, the reality is now I don’t know what’s going to happen with tax brackets, right? But inflation allows people to push up in tax brackets. Hopefully those brackets will inflate a bit with us as well, so that we’re not going to have to pay even more tax. But remember, there is no tax being taken on leverage here. Okay, so

When we do this, let’s have a look at what happens by year 11 when these actually starts to pull income. That after tax dollar of $78,000 is more like $95,000. I know it’s kind of sad. It’s kind of very heartbreaking. know. Now, if we were to do this for the next 37 years, you’ll notice that every year we inflate this by 2%. So like by year two, it’s now $97,000 he’d need to buy the same amount that he’s buying today.

after tax. Um, when after when he’s 78, he’ll need 126 if inflation’s about 2 % all the way to age 100. You’ll notice that he’s now pulling an after tax or a tax free cash flow of 195 in order to buy the same amount of things that he’s buying with $100,000 of pre tax dollars today. And after all is said and done.

the estate would still receive $6 million. Okay, so basically what we’re showing here is that with this as a base case with inflation at 2 % and assuming borrowing rate of 5%. And if he funds for 10 years, that he will be able to have more than what he is spending today while he’s working during retirement on a base case retirement plan, which again, I’m not suggesting people only do this. This is not what we’re saying, but

Isn’t it nice to know that that’s there as a backstop for you as you prepare for your retirement. Now, some people might say, good luck with 2 % inflation. That’s the target, right? We all know that that’s very difficult and 3 % might be more like the average over a longer period of time. Some people, if we include the eighties, it might even be closer to four. So we’re gonna look at those two here. Here’s this 100,000 inflating over the next 10 years. He needs about

105, $105,000 of after tax cash flow in order to buy what he’s buying today with $100,000 pre tax. Okay, so again, hurts your soul because now we’re inflating at 3%. And let’s see how far we get. get all the way to age 100. That’s 37 years of retirement.

And he’s now needing in the hundredth in his hundredth year on this planet, which is, uh, which is year 47 of this policy and year 37 of drawing an income. He’s now going to be pulling about $306,000 to be equivalent to that hundred thousand. I know it’s sad, but we do need to think about these things and how inflation impacts things. And when he passes on, there’ll still be $2 million in change left to the estate after

taking care of the loan balance against this cash value. All right, we can look at 4%. If we do at 4%, which is more aggressive, but it’s never bad to look at it just in case. You’ll notice that the cash flow he needs by his first year retiring in year 11 is about 116,000, all the way to needing 477 by age 100 or year 37 of retirement.

And you will notice that at about age 95 is when he will sort of tap out this as a retirement plan. So what does that mean? Well, if he thinks he’s gonna make it to age 100, we need to take a little less if that’s the case. For a lot of people, think, you know what, average age is way less than that. Not gonna worry too, too much about it, but also keep in mind that hopefully by this point,

He’s also done some other investing along the way, whether it’s using cash value to help him do this or by utilizing some of the extra money in his business that he is not putting or contributing towards this plan. All right. So this is a really great thing to note. Now let’s look at inflation rate of 3%. So we’ll go back to 3%. I think that’s more realistic than say 4 % every single year for the rest of time.

If we look at an average rate of inflation of 3 % over the rest of his lifetime, and we look at how much maximum could he pull in this scenario, assuming a borrow rate of 5 % and utilizing the current in force illustration based on his current policy, we can see here that he can pull a bout $118,000 of pre-tax today dollars.

which is equivalent to about 87,000 after tax when we look at the average tax rate of today’s average tax rate of about 26%. So what that means is that if you followed this plan and does not utilize the plan at all beyond funding the plan and setting it and forgetting it and just focusing on his business, he will be able to in retirement pull and have access to more after tax cashflow.

than he has today while he has a mortgage, while he has kids living at home, and while he has all of that chaos going on in his world. So the quick and dirty answer here for this particular individual is that he does not need to do more than this. However, of course, we would encourage you to consider doing some risk on investing as well, right?

Does it mean he needs to take all his cashflow in these next few years and have it all deployed? The answer is no, because if he does absolutely nothing, he has a very, very solid plan here that is essentially bulletproof. So this hopefully will help my client, but it’ll hopefully answer a lot of the questions that are out there as well. When we look at investments, when we look at wealth building, start with the rational, try to think about what are some investments I can do, but remember, that when it comes push comes to shove, sometimes emotions can get in the way from you pushing in as much capital as you may want to include in your plan. And that’s where policies can be a massive, massive benefit here gives you the opportunity to leverage for opportunities when they show up and when you feel that you’re confident in doing them. But it also gives you confidence in what your base case actually looks like. So for this particular individual, they have essentially solved their income plan for the rest of their life, assuming they follow this plan. And it gives them a lot of flexibility and actually a little more upside than they might have anticipated by simply funding the policy. Anything additional is only going to be extra gravy and extra opportunity for them to build their wealth and of course, save more legacy for others in their world when they do move on to the next place.

So I’m hoping my friends that this has been a helpful episode for you, whether you were on YouTube watching along and looking at the spreadsheet alongside us or whether you’re just listening here today. Hopefully this gave you some confidence to figure out for yourself. What is the base case that you need so that you know how much of your assets do you want and need zero volatility so you can have zero fear and have zero emotional baggage so that that peace of mind through predictability is there. So you can confidently put other capital into more risk on assets without it ruining your plan should something go wrong. All right, my friends, that’s it from me. If you’re interested in a discovery call, reach on out over at Canadianwealthsecrets.com/discovery. I’d love to run a scenario for you. Let’s figure out what’s a good base case for you to keep this opportunity fund available.

but not necessarily feeling like it has to be invested 100 % of the time in any asset. We don’t want money burning a hole in your pocket and making or leading you to make poor investments. Reach on out over to Canadianwellsecrets.com forward slash discovery. And of course, if you are an incorporated business owner, we have our free self-paced masterclass that you can dive into right now on your phone or on your computer over at https://Canadianwellsecrets.com/masterclass once again that’s Canadian well secrets.com forward slash masterclass and just as a reminder this content is for informational purposes only you should not construe any such information or material as legal tax investment financial or other advice and I am a licensed life and accident and sickness insurance agent which allows me to help folks just like you to put in any type of insurance products such as

a permanent insurance product like you’ve seen in this episode here. So reach on out to me. I’m the VP of corporate wealth management with the pan Corp team. And that includes corporate advisors. We will chat soon and we will see you in the next episode.

Canadian Wealth Secrets is an informative podcast that digs into the intricacies of building a robust portfolio, maximizing dividend returns, the nuances of real estate investment, and the complexities of business finance, while offering expert advice on wealth management, navigating capital gains tax, and understanding the role of financial institutions in personal finance.

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