Episode 63: Create Your Own Canadian Pension Plan So Good That Ontario Teachers’ Pension Plan (OTPP) Members Will Be Jealous!

Listen Now!

Are you tired of hearing how amazing the Ontario Teachers’ Pension Plan (OTPP) is, leaving you feeling left on the sidelines for a comfortable retirement just because you’re a pensionless T4 employee, Canadian business owner, or entrepreneur?

For the few industries that still provide Canadians defined benefit pension plans (DBPP), these sources of financial security in retirement are one of the major contributing factors that keep employees chained in their golden handcuffed careers. It is hard to blame the many Canadian employees for “sticking it out” when the company pension represents a financial safety net for life beyond your working years. Who would turn down the opportunity to earn an income into perpetuity after you “retire” so you can sleep a little easier at night.

In this episode we’re going to teach you how to easily create your own safety net using a little known Canadian Wealth Secret surrounding a massively under-utilized financial tool that – when designed strategically – will make any retiree jealous!

What You’ll Learn:

• Discover innovative wealth building strategies that give you the benefits of a guaranteed pension without many of the limitations that come with them.
• How creating your own “pension” can not only create financial security in retirement but also create a lasting financial legacy for future generations.

Resources:

• Episode 54: How To Supercharge Your Emergency Fund
• Episode 45: Should I Invest In RRSP or TFSA
• Episode 38: Clarifying Your Life’s Why So You Can Achieve Your Dream Lifestyle
• 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!
• Looking for a new mortgage, renewal, refinance, or HELOC? Reach out to Jon to share some options.
• Follow/Connect with Kyle Pearce on LinkedIn for daily posts and conversations about business, finance, and investment. 

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.

By hopping on a discovery call with Kyle, he will review your specific personal and corporate financial situation in order to determine if there are some quick wins available for you to minimize taxes personally or corporately, provide ideas for how you can increase your personal cash flow, and ensure that the net worth of your estate continues to grow in tandem.

Let’s Connect For A Discovery Call!

For those interested in having a review of your financial wealth plan, learning more about potential joint venture (JV) opportunities, or a mortgage review, book a free discovery call now.

Watch Now!

Episode Summary:

Kyle and Jon discussed various financial topics, but specifically the topic of creating financial security in retirement through a self-created Canadian pension plan for yourself. They highlighted the potential benefits of borrowing against a pension fund and using the cash value of a policy for emergency loans. They emphasized the importance of retirement planning, creating a legacy, and committing a higher amount into a pension scheme. They also discussed the financial implications of a teacher’s pension in Ontario, Canada, and their strategy for helping entrepreneurs and business owners utilize corporate tax dollars to increase their wealth.

Financial Planning and Pension Schemes

Kyle and Jon engaged in a comprehensive discussion about financial planning, investment strategies, and pension schemes. They explored the benefits and implications of investing in an insurance policy, including the potential for tax deferral and financial management tools. They also discussed the possibility of borrowing against the cash value of the policy and the use of the policy’s cash value for emergency loans. They highlighted the flexibility and potential growth of borrowing against a pension fund, as well as the potential for a death benefit. The conversation also touched upon the importance of retirement planning, the long-term strategy of creating a legacy, and the potential of committing a higher amount into a pension scheme. Towards the end, they discussed the financial implications of a teacher’s pension in Ontario, Canada, emphasizing its attractiveness due to the government match.

Retirement, Inheritance, Investment, and Corporate Tax Strategies

Kyle and Jon discussed various financial planning strategies for retirement, including the potential of withdrawing money from a pension fund in a way that could result in more money than what would be received in the pension itself. They also touched upon the idea of “die with 0”, which refers to leaving no money to heirs. They highlighted the importance of understanding the financial implications of different decisions and the potential impact on future generations. The conversation also emphasized the benefits of certain investments, including their guaranteed returns and additional features. Towards the end, they discussed their strategy for helping entrepreneurs and business owners utilize corporate tax dollars to increase their wealth. They highlighted the benefits of incorporating and earning active income in a corporation, as well as the potential use of permanent life insurance as a tool for wealth generation and protection.

00;00;00;02 – 00;00;16;19
Kyle Pearce
Are you tired of hearing how amazing the Ontario teachers pension plan is? And you’re feeling a little left out because you’re a Canadian business owner or an entrepreneur? Or maybe you’re even a T4 employee and you don’t have something as awesome.

00;00;16;23 – 00;00;35;04
Jon Orr
Pensions are one of the main components that keep people chained in the golden handcuffs careers. That was us. That was us. And pensions are a safety net. And then they are those safety net. That’s why we have them. We look at them so fondly as something that it’s necessary in our jobs and time. And I looked at it that way, too.

00;00;35;06 – 00;00;40;29
Jon Orr
Who wouldn’t want cash for life after you retire? Pensions. Let us sleep at night like a baby.

00;00;41;01 – 00;01;06;28
Kyle Pearce
In this episode, we’re going to teach you how you can easily create your own safety net and pension like tool that will make any retiree jealous. Here we go.

00;01;07;00 – 00;01;12;15
Kyle Pearce
Welcome to the Canadian Wealth Secrets Podcast with Kyle Pearce and Jon Orr.

00;01;12;15 – 00;01;24;12
Jon Orr
We are covering high school mathematics teachers and education consultants whose entrepreneurial spirit led us to begin multiple businesses in real estate investing, digital courses and coaching and consulting after the bell rang at dismissal time.

00;01;24;20 – 00;01;46;18
Kyle Pearce
Fast forward a decade later where we’ve grown our portfolios and time freedom to the point where we can now help entrepreneurs, business owners and investors grow their wealth into a legacy that lasts generations through hidden investment and tax secrets. Your financial advisors won’t believe our true cal.

00;01;46;19 – 00;02;08;04
Jon Orr
Let’s get into this. When I know that you’re super excited to talk about this, you geek out on numbers and we are going to get into a little bit of numbers here, folks. But this idea, I think, comes out of something that’s always weighed on our minds as we transition from t for employees of school boards. We are recovering high school mathematics teachers who’ve completely changed our trajectory.

00;02;08;06 – 00;02;26;12
Jon Orr
And one of the big questions we always ask when we started to make that shift and happened before we made that shift is to go like, okay, what about our pensions? What are we going to do with those? I don’t want to give those up. How can we create or how can we mimic that safety net that we’ve relied our whole careers on?

00;02;26;12 – 00;02;46;08
Jon Orr
And because we’ve talked about this many times on the podcast, is that when we got into teaching, you knew your pension was there. It comes in lockstep with when you start that job as a teacher, you got it and you count on it. You’re like, Hey, as long as I teach for 30 years, when I hit my 85 factor, I’m going to walk out that door and I have cash for life.

00;02;46;08 – 00;03;07;20
Jon Orr
And I’ll never have to, like, think about investing and I never have to do that because I have this great world renowned pension plan at my disposal and you’re not going to have that. And people people do not have these things that are so well-respected or well, well off, right? They are pensions. We have access to pensions in different businesses or different other organizations, but some people don’t.

00;03;07;20 – 00;03;14;17
Jon Orr
And it’s like we can recreate this. And that’s what we’ve been digging for a few years on how do we recreate this? We got it. We figured it out.

00;03;14;20 – 00;03;34;18
Kyle Pearce
It’s so funny when you said that about the 85 factor, right? It’s like, I know that Matt Back, one of our original invested teacher hosts, Matt Bigley. I remember him saying this, and I’m sure it was on one of the episodes where he articulated every teacher knows like the exact date of when they could officially retire at the 85 factor.

00;03;34;22 – 00;03;35;25
Kyle Pearce
I can log in right now.

00;03;35;25 – 00;03;38;08
Jon Orr
COBRA 2036th October 2036.

00;03;38;08 – 00;03;56;26
Kyle Pearce
They got it there it is. And you can log in right now and you can play with the calculator and kind of go like, Hey, if you leave teaching before you’re 85 actor, here’s what’s going to happen. Hey, if you commute your pension and take it and put it into what they call like a lira or a locked in retirement account, you can get this much money based on blah, blah, blah.

00;03;56;27 – 00;04;17;29
Kyle Pearce
There’s all kinds of things you can do in there. And for me, like a guy like me, I’ve talked about it so many times before. I’m all about security from a financial perspective. There’s something weird. Someone dropped me when I was young. I have no idea, but that is my prime question. John Here’s the crazy part. We as humans, what I’m starting to recognize more and more.

00;04;18;04 – 00;04;43;29
Kyle Pearce
We talked about the psychology of money, the book Psychology of money in previous episodes. And when you really think about and you unpack why we do what we do, why more people aren’t smart about investing or all of these things, it really comes down to emotion. And for a guy like me, my emotions are irrational when it comes to some of my security issues around money.

00;04;43;29 – 00;05;08;04
Kyle Pearce
Now, here’s the interesting part. It’s not like I don’t have any sort of assets. I had the pension going on and I had a real estate portfolio. And John, before we decided to step away from teaching, I was still struggling with this idea. And one of the big holdback says you articulated was I’m like, can I recreate the pension that I had that was on my mind?

00;05;08;05 – 00;05;26;29
Kyle Pearce
That was a big hold back for me, was like, If I cut these golden handcuffs off, will I be okay? Now, here’s the interesting part. If I just took the real estate portfolio and I did the math, which I did. Trust me, I’ve got spreadsheets and spreadsheets of playing, playing, playing. I was like, Oh, yeah, it’s going to be okay.

00;05;27;01 – 00;05;29;09
Kyle Pearce
But there’s no guarantee that, right?

00;05;29;09 – 00;05;32;03
Jon Orr
There is no guarantee. It’s like you’re still based off the market, right?

00;05;32;11 – 00;05;59;25
Kyle Pearce
Totally. And I’m like, Well, what if what if this what if that what if this? And of course, you can’t completely eliminate all of those things. For example, like maybe the Ontario teachers pension plan ends up folding or whatever. These are all things that could happen. It’s just very unlikely given how big the pension is and given how they do all that they do to make sure that all of those pensions are going to be sustainable, unlike CPP, for example.

00;05;59;25 – 00;06;25;20
Kyle Pearce
Right. CPP is like it’s actually underfunded and it’s not being well managed and all kinds of issues there. This is pretty much set in stone. So my thought was, okay, if I’m going to be taking this leap out, even though I’ve got an active business, we had our consulting business doing really well. I had this real estate portfolio that is large and continues to grow and I had some other investments going on outside of my pension.

00;06;25;20 – 00;07;03;02
Kyle Pearce
It was like I still went down this rabbit hole because I’m like, I feel like I just want to know what is my like, ultimate worst case scenario. If everything else went away, what would be that amount? And basically I was set out on a journey to recreate a pension. How can I do it? Using the safest tool in the most predictable way and if possible, Hack I would love to be able to do it where it’s almost like over time that I can actually start maybe moving some of my other assets because I don’t plan on owning all of these real estate properties for the rest of my life.

00;07;03;02 – 00;07;21;06
Kyle Pearce
At one point I thought that would be me, but I’m now recognize I’m like, I probably don’t want to have to deal with all of that later in life. So as I did accumulate that portfolio over time, I’m going to be looking to put it into more safer things. And I was like, What is that thing going to be?

00;07;21;06 – 00;07;42;01
Kyle Pearce
And I explored things like annuities, right? Everyone’s like, Well, annuities are great. They’re like, basically an annuity is like a pension. The difference, though, is that you typically buy it in one smack. You come in and you go, okay, I’m going to start this annuity next year. I’m going to like give you a smack of money and they’re going to give me some sort of guarantee and lots of advisors approve of them.

00;07;42;01 – 00;07;59;12
Kyle Pearce
Dave Ramsey even approves of them and yet I was like, Hmm, I don’t like it. I analyze them and I’m like, I don’t really like it and I don’t like how I have to wait. And it’s like I have to do something with my money until I get to retirement in order to prepare for that, it looks like, right?

00;07;59;15 – 00;08;19;16
Kyle Pearce
And then you’re kind of like, That’s it, you’ve done it. Now you get this lifetime income and the other part I didn’t like was the guarantees that they associated with it. By the way, annuities are typically offered by insurance companies, so that part’s safe, but it’s like it’s very, very defined, much like a pension. Right. So I’m like a lot of people would be like, well, the annuities the answer.

00;08;19;23 – 00;08;34;05
Kyle Pearce
But I was like, man, I got to put a lot of money into based on the rates we were looking at recently, I have to put a lot of money into this pension if I want to get what I would be getting from the teachers pension. So I kept on looking.

00;08;34;08 – 00;08;52;28
Jon Orr
Right. So the pension plan was still the winner when you looked at that particular option. So then like after that option, look in comparison, it’s kind of like where do we look next? And have you been listening to this podcast for more than a few episodes? You probably have a good kind of inkling on like what tool can be useful here, but we’ll get to that in just a sec.

00;08;52;28 – 00;09;14;02
Jon Orr
But let’s talk about kind of the pension itself as a tool for your future financing, your future wealth, your future like having money, set aside the safety net that we talked about because some people, if I don’t have a pension, I’m putting things into RRSPs or I’m investing in tax free savings account. But let’s talk about some of the negatives of our pension.

00;09;14;02 – 00;09;37;00
Jon Orr
Let’s talk specifically about our Ontario teacher pension. So that’s a great kind of kind of comparison to say the primo people look to it. It’s the standard that all other pensions are compared against and we want to think about it’s all great. We all think it’s amazing. But there are some drawbacks to our pension. And I think especially when we start to compare it to other options and we’re going to do that direct comparison.

00;09;37;03 – 00;09;56;21
Jon Orr
But one of the big things that I think that is been brought to my attention just recently and more specifically by Yukon, because you are the fact finder, you’re the digger is to think about what happens to your pension when you die, because I think that is a real important piece that says like, okay, I would be set for life because I retired.

00;09;56;23 – 00;10;19;23
Jon Orr
And then, okay, if I’m set for life because I retired, what happens if I die? What does my beneficiary get? Do they do they get my full pension? No. Do they get some of it? Yes. The other conditions on that? Yes. What about my estate? Do my kids eventually get this money? Is it passed down from If once my spouse dies, does that now trickle down to the next line?

00;10;19;23 – 00;10;29;12
Jon Orr
The answer is no. It’s so. It’s like their big questions here that we want to answer and because can we recreate it as one, but can we recreate it better? Is it actually even better?

00;10;29;18 – 00;10;49;15
Kyle Pearce
Right. Absolutely. And something that’s really interesting is that let’s chat about that. You brought up this idea of after. We’ll also talk about like, how is it even funded? Well, we’ll get to that that answer or that wonder later. But I like your question like, yeah, what happens after? So the security part for me is great because I’m like, while I’m here, I got this pension.

00;10;49;15 – 00;11;05;22
Kyle Pearce
I know what it’s going to be. It’s defined, right? They call it a defined benefit pension plan. So it’s like, I know what’s going to happen. Amazing what a lot of educators I know. I didn’t really know this. I guess it’s because I didn’t care after I’m gone, I suppose I was just like, Well, my wife was on her own.

00;11;05;27 – 00;11;22;23
Kyle Pearce
Yeah, my wife is a teacher. I was a teacher and we both had these pension, so we were kind of like, Hey, we’re going to be okay. And that’s great. And then we had these other investments and that’s fine. And that’s just going to hopefully make things better and make life easier. We’ll call it where we can live and travel and do those things.

00;11;22;26 – 00;11;42;29
Kyle Pearce
But then as I started analyzing this, when you leave something, you start to recognize some of the faults that were there that you didn’t know existed before. So before I left teaching, before I decided that, hey, I was going to walk away from this thing, I never really thought about it. But then when you go, Hey, I want to recreate this, you’re like, Well, what am I recreating?

00;11;42;29 – 00;12;08;00
Kyle Pearce
How am I going to recreate this thing and what’s reasonable, what’s going into this thing and what happens after? So let’s start with that. I can retire at my age 85. Factor for me, I think it was around. I started when I was 23, so I think it was like I was in my 55th year on this planet when I hit my 85 factor around 30 years and I was going to receive a pension of around $60,000 before taxes.

00;12;08;00 – 00;12;36;19
Kyle Pearce
Okay. So yeah, John, you were right on the same track. Maybe there’s teachers listening or folks who are married to teachers, business owners who are married to teachers. So, hey, that’s great. 60,000. That’s awesome. Now, something that I think worried me, this always worried me, which is probably what led me to other investments. And I chose real estate as kind of the main one was I was like, Well, wait a second, I’m earning over a hundred thousand now and I’m going to immediately go down to 60.

00;12;36;21 – 00;12;48;21
Kyle Pearce
And the assumption we make and this is a financial planning mishap, I think, is that we just assumed that when you retire that you’re going to spend less, right? You’ll be in a lower tax bracket as one of.

00;12;48;21 – 00;12;49;18
Jon Orr
My shows will be paid.

00;12;49;18 – 00;13;06;19
Kyle Pearce
Off of my house will be paid off, and you won’t need as much money. I don’t like that idea. You know, personally, one thing I liked about teaching was we were on this ten year grid or 11 year grid where you started really low. I didn’t like that part, but the part I liked for that decade was every year you got a raise.

00;13;06;22 – 00;13;26;06
Kyle Pearce
It was a good bump and it felt like, Wow, my life is getting easier. It’s getting easier and easier. As we do this now, I’m looking at this going, okay, so I’m going to get 16,000 and retirement. Then I start going, What’s going to happen after if I died? What happened if I died the year of my retirement?

00;13;26;06 – 00;13;48;21
Kyle Pearce
So I died right after I hung it up. What happens if I died 15 years from then? What happens if I die really late? And it turns out that there are some options that you can pay for in order to give a what they call a surviving spouse or a surviving partner, benefit or dependents. If your children are still dependents, if you don’t have a surviving spouse.

00;13;48;23 – 00;14;16;22
Kyle Pearce
And typically that’s between 50 and 75% of your pension. All right. So I think standard is around 60%. You can save money by reducing it to 50% or you can actually pay more for this essentially insurance to boost it up to 70, 75%. Okay. So there’s that. Now, I was like, okay, that’s interesting. So then I start doing the math on that and go, okay, so if let’s say we’re at 50% just to keep it simple.

00;14;16;25 – 00;14;36;19
Kyle Pearce
So you’re telling me that my pretax income for my spouse, so like when I die, my 60,000 turns into 30,000 for my spouse, All right? I’m like, better than nothing. But then you do the math on that. If I died early in the journey, then I’m like, Am I even getting all my money back? You kind of almost.

00;14;36;19 – 00;15;00;24
Kyle Pearce
We’ll call it break even. And in some cases, I’m like, That doesn’t seem as good, right? I like the guarantee. If I live to 183, it’s guaranteed. I know I’m not going to. But that part really bothered me that I’m like, Oh, I see what you’re suggesting in this thing. But I might not get like depending on when I die, this might actually not make rational sense in terms of my return.

00;15;00;27 – 00;15;19;15
Jon Orr
So here’s what you’re saying. I think I think I get what you’re saying is, is let’s say over the course of my career, I contributed $300,000 of my money. I sold cash out of pocket. Let’s say it went into this jar over here in that jar. It earned extra interest, whatever. But I put 300,000 and it grew to a certain amount.

00;15;19;18 – 00;15;34;07
Jon Orr
And what you’re saying is, if you account for that interest, when you start taking that money out, because that’s what happens, right? That’s really what your pension’s doing. They investing it for you. Now you’re pulling that money out. You’re saying like if I die early, maybe I don’t get my 300 K back. And where does it go, Right?

00;15;34;07 – 00;15;41;04
Jon Orr
Does it go to my wife? And if so, if she starts playing, do I get my 300 K back? And if not, where does that extra money go?

00;15;41;07 – 00;15;59;29
Kyle Pearce
Right. And what happens if we both die in the same year, which again, I know these are all probability we could run it all in all those things. And that’s how they’re doing these calculations. Basically, a pension plan runs its world exactly like an insurance company does, right? It’s actuaries. Like actuaries are designing the pension to make sure it works.

00;16;00;02 – 00;16;22;02
Kyle Pearce
Sure. For sure. Make sure it’s going to be able to do what it does. And the same thing on the insurance side as well as annuities. Right. It’s all the same mathematicians doing all the same types of calculations, very complex ones to make sure that everything’s going to work out okay. But you get a guy like me now I’m backwards mapping this thing and going like, is this thing actually as good as everybody makes it out to be?

00;16;22;02 – 00;16;40;16
Kyle Pearce
And it’s like, okay, well, everyone loves the safety. So I’m like, okay, I loved the safety. So I get that. But then when I start sort of pulling back the veil a little bit, I start to recognize that this thing isn’t as amazing as everybody saying it is. And here’s the crazy part is that it’s sort of like looked as the best one out there, right?

00;16;40;16 – 00;17;15;24
Kyle Pearce
So you have the police, you have firefighters, you have other, let’s say, government workers. And so forth. They all have pensions, too. And it’s like this one’s supposed to be the best one. So I haven’t researched the others, but I’m like, I’m going to guess that they’re probably in a similar situation. And I should add, you can add on additional insurances like, for example, the ten year guarantee where basically you can say, Hey, if you die in the first ten years of your retirement, we’ll pay out at least the remaining of those first ten years to your spouse and then they’ll keep getting that half or 75% benefit.

00;17;15;27 – 00;17;26;07
Kyle Pearce
But again, if that spouse dies as well, it’s like, huh, You look at it, it’s like it’s all a lottery game, much like insurance is. And I was like, wait a second, how much? You might even putting into.

00;17;26;07 – 00;17;47;08
Jon Orr
This thing, Right? So there’s that. And then there’s also the fact that, let’s say this jar is sitting over there that’s got your name on it. You can actually access the value of that jar your home, right? You have access to the value of your home. If you wanted to get a home equity line of credit and borrow against the value of your home to make other investments, you can’t do that with your pension.

00;17;47;10 – 00;18;02;26
Jon Orr
You can’t go, Hey, I’ve got this pension over there. It’s worth this much. Can I get a loan against it? It’s not that same function. Is this money for the future, but you’ve absolutely no access to it. Kind of like your RSP, right? Like your RSP. You’re contributing to it over the course of a long time. It’s sitting over there.

00;18;02;26 – 00;18;09;14
Jon Orr
It’s a jar with your name on it. You can’t go, Hey, I’ve got all this money sitting there. I can’t borrow as collateral against the value.

00;18;09;16 – 00;18;28;25
Kyle Pearce
Well, and here’s something interesting as well. I think the idea that you can’t touch it, I think for many people is actually a good thing simply because look at all the other industries that do not have a defined pension plan. Right. And it’s like when you’re a teacher, you are forced into this world that it’s coming off your pay.

00;18;28;28 – 00;18;48;04
Kyle Pearce
And that’s just how it’s going to be. And it seems like a pretty good deal. So you’re like, I’m okay with it, right? No one’s mad about that. But the reality is, is that everybody else isn’t doing that. So maybe they don’t know what to do or it’s like they don’t have the commitment or the dedication to doing that, or they’re just not thinking for the future.

00;18;48;06 – 00;19;17;20
Kyle Pearce
But what I want to also articulate, you said, Hey, you’re putting around 300,000 into this thing. I just also want to mention that the Ontario government matches what you’re putting in as a teacher. So this to me is really important to note. So even though you don’t see it coming off of your pay, like you see 12,000 or 13,000 or whatever it is coming off of your paycheck every year on your T for what you don’t see is that the government, the Ontario government, matches that contribution.

00;19;17;20 – 00;19;46;03
Kyle Pearce
So when you say 300, it’s kind of more like you’re having 600,000 being put in here on average into this pension. It’s a little less but around that number and it’s like, wait a second, we need to actually look at what this thing is for the actual dollar for dollar that’s going in. So that’s what we’re going to do here is we’re actually going to look at this thing a little bit and we’re actually going to look at what I discovered when I was trying to recreate this for yourself, for me.

00;19;46;10 – 00;20;09;14
Kyle Pearce
And also, we’re doing the same thing for Matt, right? Because Matt left teaching is now out there. He’s a realtor. For those who know the early episodes, he was on here with us all the time, and basically we just wanted to have this one spot that could recreate this one asset we had. And we always sort of looked at as sort of the thing that we would hinge our retirement on and everything else was a bonus.

00;20;09;16 – 00;20;27;26
Kyle Pearce
So we’re going to take a deep dive here. And when I look at the teachers data for those who are on YouTube, we’re not going to spend too much time going through the nuances of it. But if you are on YouTube, you can pause, you can take screenshots by all means. This is not meant to be exact. Exact exact.

00;20;27;26 – 00;20;51;03
Kyle Pearce
We approximated tax rates. We did a bunch of things, but you can definitely see it on YouTube. I’m sharing my screen right now for those who are on YouTube hanging out with us and you’ll get a sense of the salary grid. I took a recent salary grid for teachers and then also the fact that you’re paying between ten and 12% of your annual salary into the pension.

00;20;51;09 – 00;21;09;02
Jon Orr
So we’re looking at like a case study Kyle’s grabbed. What he said is looked at when you start your career at, let’s say, 25 years old and he’s grabbed a salary grid from what that salary would be at 25, stretched it out to the time of retirement and gone. Okay, let’s look at a full case study of what this looks like.

00;21;09;02 – 00;21;31;13
Jon Orr
If you’re contributing the value towards your pension every paycheck, every year, you’re contributing a certain amount. The government’s going to match it. So on the screen right now is what he’s showing you, showing a spreadsheet from 25 to the age of 55, which is where typically teachers do retire if you start at that point. So this is one specific case study that’s going to kind of walk through recreating.

00;21;31;13 – 00;21;41;02
Jon Orr
In this case, we’re looking to look at what the pension looks like numbers wise for that career. And then also after this, we’re going to jump to how we recreated this. And even better.

00;21;41;05 – 00;22;00;19
Kyle Pearce
Awesome, Awesome. So you’ll see the last two columns here. They show how much the teacher after considering a tax refund, I’m trying to be, as I’ll call it, aggressive in favor of the pension. I’m actually trying to help its case here and you’ll see that I’m showing the government match when you actually look what’s going in. You said about 300,000 here.

00;22;00;19 – 00;22;31;11
Kyle Pearce
We’ve got an average of about 282,000 from the teacher and about 282,000 from the government or 564. And we just averaged it out to about $18,800 per year going into this pension from both sides. Right. So this pension is like getting this much money on average being pumped in by every teacher via the government and their salary each and every year to fund what we call the best pension fund in the world.

00;22;31;11 – 00;22;55;06
Kyle Pearce
That creates the best outcomes. And what we did is we took one of my favorite tools and your favorite tool there, John, is the idea of a permanent whole life insurance policy. Now, some people just hit end because they’re like, Well, I heard from Dave Ramsey that these things are horrible and I’m going to show you right now how this can be so much better than the Ontario pension.

00;22;55;06 – 00;23;12;20
Kyle Pearce
Now, I’m not telling you to opt out of the Ontario pension. We are just saying you don’t have it. You don’t have one. You should at least consider getting a scenario mapped out for you. Now, you don’t have to do it over 30 years either. There might be some of you are 45 and you’re like, Shoot, I didn’t really plan this out, right?

00;23;12;22 – 00;23;31;28
Kyle Pearce
There are ways that this can work for you as well, but we’re looking at just an apples to apples teacher to pension policy comparison here, because again, we aren’t going to be able to continue the pension and we’re going to have to commute our value because it just doesn’t make sense to keep it in there in that particular scenario.

00;23;32;00 – 00;23;48;21
Kyle Pearce
So what I did is I took this 25 year old person nonsmoker, just typical person made them male. So it’s actually a negative. And we just showed that this person’s going to put in for 30 years. He’s going to put in $18,800 into this policy.

00;23;48;22 – 00;24;11;19
Jon Orr
Imagine like that, you’re going to put 18,000 of your income in there and you’re like, wait, But before it was only really 9000 of my income that was going in there because the government was matching the other nine. But really what remember, think about this. The government has set aside like when you say I make $100,000, the government is saying like, well, really what we’re paying you is more than that because on paper you made $100,000.

00;24;11;19 – 00;24;26;18
Jon Orr
But we have to contribute that extra money into your pension. So typically you’re actually making more than that because of your benefits and all these other things that the government has to pay for. So when they’re budgeting, they’re budgeting, hey, I’ve got a budget. All this other money you don’t see to pay for you. So we’re doing the same thing here.

00;24;26;25 – 00;24;45;11
Jon Orr
We’re making the same contribution to that. So if you’re saying, Hey, I’m going to quit my job, it’s like, well, really think about, oh, my take home was $100,000 or not my take on my pretax dollars, on my tip or slips that $100,000 consider, Hey, you’re making more than that. And if you want to live the same lifestyle, you’ve got to pay yourself a little bit more.

00;24;45;13 – 00;25;09;21
Kyle Pearce
Absolutely. Absolutely. And we’re going to look at a case, too. We’re going to look at this. We’re not even going to consider for our business owners and entrepreneurs out there, this is way better inside of a corporation. So if you do have a corporation and you’re like, Hey, I like this idea of having some sort of base case or whatever, there are so many more benefits as to why you’d want to do something like this inside of a corporation instead of outside.

00;25;09;24 – 00;25;26;14
Kyle Pearce
We’re going to get into that in future episodes, but don’t wait. Reach out to us if you want to learn more. We’re talking about this on a personal level right now. So you’re just a T for employee. You’re out there, you’re making money and you’re like, I don’t have a pension. You don’t have a match program. Again, I’m not telling you not to do a match program.

00;25;26;14 – 00;25;50;19
Kyle Pearce
If let’s say you’ve got a they’re like, Hey, we’ll match your contributions to your RSP. Take advantage of all that stuff. Not telling you not to. What we’re trying to do is just comparing apples to apples here so you get a better sense of what this tool can potentially do. So here in year one, one benefit I like is that, hey, if I took $18,800, I’m not a teacher and I was going to put this into my RSP.

00;25;50;22 – 00;26;24;03
Kyle Pearce
Sure, I get my tax incentive or at least the tax deferral, right. I get my income tax back in my pocket now and then I push it down the road inside the RSP. But the one thing you don’t get is that you actually don’t get to use this tool for anything else. So right away in year one, even though you don’t have access to all 18,800, you have access to about 16 five of cash value that you could leverage for another opportunity or for an emergency.

00;26;24;03 – 00;26;41;28
Kyle Pearce
Right. So if you had something came up where you’re like, a lot of people do not put enough money into their RSP from the fact that they’re like, I don’t know what’s going to come next. What if this what if I get laid off? What if that what if all these things and you’re like, I don’t want to put my money into tax jail?

00;26;42;00 – 00;27;05;17
Kyle Pearce
So what do they do? They oftentimes do nothing. Whereas here you have access to leverage it contractually at any point. We’re not suggesting you do it for no reason. But that flexibility gives you a little bit more, we’ll call it availability, a little more confidence that when you put something in there, it’s not stuck there till you’re 55, 60, 65.

00;27;05;24 – 00;27;16;15
Jon Orr
In a way, it’s stuck there. But you get to you say have it’s collateral if I want to borrow against it. Right. It’s like the value of your home on a hillock. It’s like you’re not taking the actual value of your home away. You’re not.

00;27;16;15 – 00;27;17;00
Kyle Pearce
Selling.

00;27;17;00 – 00;27;37;10
Jon Orr
Your borrowing against it. But remember that we are actually recreating the interior teachers pension plan using this case scenario. And we are going to do better than that. But here’s a benefit that makes it just slightly better. It’s like, Hey, you have access to borrowing against this money, whereas you have no access to your Ontario teachers pension or your pension plan value.

00;27;37;10 – 00;27;39;22
Jon Orr
All right, Cal, keep walking us through the scenario.

00;27;39;24 – 00;28;00;24
Kyle Pearce
Absolutely. And as people probably know from previous episodes, this is growing tax sheltered and it will eventually, upon death, it will pay out tax free to the beneficiaries of this particular policy. So you’re getting kind of a win win here that you’re not going to get taxed on the way out the door. If you borrow against this, you’re not getting tax.

00;28;00;24 – 00;28;17;28
Kyle Pearce
They’re either just like if you borrow with a lock on your home, you’re not getting tax, it’s not income. You’re borrowing against this asset that you’re growing, which we’re calling our pension, our supercharged pension here. So let’s take a look. So right away, off the bat, you’re like, okay, so I get in this habit, I start doing that.

00;28;17;28 – 00;28;38;23
Kyle Pearce
Now notice as well, if I’m 26 and very, very rare case, but if let’s say I were to pass away immediately, there’s a death benefit of about almost $1,901,000. So again, something that you’re not getting when you invest into your teacher’s pension for one year, right? I invest in my teachers pension. I die as a 26 year old teacher.

00;28;38;25 – 00;29;01;15
Kyle Pearce
That is not helping me. I am not getting anything except for what that pension’s worth coming back out here, you’re getting this additional benefit. So all benefits. Let’s see what’s happening here. As everyone knows on this particular show, by like year five ish or so, you’ll start to see that the amount you’re investing into this thing contributing, it starts to get bigger.

00;29;01;15 – 00;29;26;13
Kyle Pearce
Yeah, contributing your starting to see the growth accelerate. And we actually showed an average compound rate of return here in the first few years. The rate looks garbage, but by year five we’ve now averaged one almost 1.1% in each of the first five years. So again, these numbers no longer exist because now this is an average based on those first five.

00;29;26;13 – 00;29;45;17
Kyle Pearce
And that’s basically the insurance companies saying, listen, don’t do this. If you’re going to cancel within the first four years because that’s more pain for us and we’re going to make it painful for you. However, you stick around five years or longer, hopefully for life, you’re going to see that the average rate of return keeps growing. Amazing. Awesome.

00;29;45;20 – 00;30;08;01
Kyle Pearce
So let’s see what happens here. We keep contributing. Let’s go. By year ten, I’ve contributed 180, almost 190,000 my cash values to 28 that I can leverage against. Maybe there’s a real estate opportunity there and I want to put a down payment on this investment. Oh my gosh, that’s great. It’s a cash flowing property. What am I going to do with the cash flow?

00;30;08;07 – 00;30;27;19
Kyle Pearce
Maybe I just funnel it straight back in to my policy loan over here because again, this is my pension. That was the goal of this thing. So we don’t want to just be spending money. No, we want to make sure this is your safety net. DO Yeah. That we optimized this thing so I personally would take this and I’m going to try to optimize by investing in other assets.

00;30;27;26 – 00;30;49;01
Kyle Pearce
But let’s pretend that you’re not like me and you just keep rolling along. Yeah, we’ll keep retirement. We hit age 55, so we’ve done this for 30 years. We have now contributed quite a bit of money here, 18,800 ish per year all the way to year 30, just like you would have done in your pension with the government match.

00;30;49;03 – 00;31;17;27
Kyle Pearce
And you’ll notice the average rate of return based on the dividend rates that are paying out currently is about five just over 5% tax sheltered and your actual cash value has risen to about $1.2 million and your death benefit has increased to $3 million. So let’s pause here for a second. I can start taking an income here by just simply borrowing against this.

00;31;17;27 – 00;31;41;19
Kyle Pearce
We’ll call it our pension, right? We’re going to start paying ourselves. So because we’re retiring and we have to sort of benefits going on here, I can borrow against the cash value. And if I were to potentially die the year of my retirement, I would have a $3 million death benefit paid out to my state instead of 600,000.

00;31;41;20 – 00;31;47;22
Kyle Pearce
If I do the ten year guarantee and pay for that ten year guarantee on my pension.

00;31;47;24 – 00;32;04;14
Jon Orr
So that sounds pretty good. That sounds pretty good. But when you say like, let’s say we go forward, because the whole point is I’d like to have cash for life is I want to be able to pull money from my pension every year, get my paycheck just like I was working and continue to live my lifestyle. So when we say you’re pulling money from this, you’re not actually pulling money.

00;32;04;14 – 00;32;25;15
Jon Orr
When Kyle was saying there as you’re actually taking a loan against the cash value of that whole life policy. So the cash value is the present value of the death benefit at that current time. So you’re actually, let’s say how right now. I think if I didn’t quit when I retired, I would get 60% of my annual salary.

00;32;25;15 – 00;32;47;00
Jon Orr
So if we’d say, let’s talk about after tax, because this is actually tax free, like Kyle said, that death benefit is growing, is not a taxable event. That happens when you get that money. So that $3 million that’s sitting there at the time of death that’s passed over to you without taxes, to the estate, we’ve got at one point something I think you show me there of cash value.

00;32;47;00 – 00;33;09;03
Jon Orr
So let’s say I borrow what I would normally get as my paycheck in my Ontario teacher pension plan. So after tax, we’re going to say about $45,000 of after tax money will go in your pocket to put in your bank account for the year. So let’s say we borrow that 45,000 against the cash value of this policy. We got to pay interest on that, right?

00;33;09;03 – 00;33;31;07
Jon Orr
So it’s like we’re not taking it. We need that policy to continue growing year but a year to year. So we’re just going to borrow it. And you’re like, wait a minute, I’m borrowing against it, which means I have to pay interest. So yes, you have to pay interest. So, Kyle, your scenario here, I think accounts for current about maybe let’s say around a 5% interest rate for your policy loan.

00;33;31;07 – 00;33;57;25
Jon Orr
So I’m going to take $45,000 out. Let’s say I borrow that against that policy and I have to pay my 5% interest for that year. Yep, it’s more so now I owe like what, $47,000 to the insurance company. But if I die that year. Right. So here’s why these numbers work out in our favor. And we’re going to show you this as you get older and older and older after you retires if I die after that year one.

00;33;57;25 – 00;34;24;07
Jon Orr
So I’m 56. I borrowed $45,000. I owe $47,000 ish to the insurance company because I borrowed it. But if I die that year, my state gets $3 million. So that $3 million is more than enough to pay off my $47,000 loan and give my family a bunch of money, a big paycheck, so that they can continue living their life or funding.

00;34;24;07 – 00;35;01;08
Jon Orr
What’s going to happen with your spouse who’s surviving you and how to fund their life? So in a nutshell, that one small example, if that year, one kind of explains what’s going to happen year to year to year, because you’re going to continue that every year, you’re going to borrow against your policy loan $45,000 a year because that’s what your pension would be at that 5% interest rate and your loan growth, you know, like I think what if you jumped a year, let’s say I’m 70, Kyle, go to when I’m 70 years old and I’ve taken out what you’ve taken out like okay $45,000 from 55 all the way to 70 or you’ve borrowed that

00;35;01;08 – 00;35;25;29
Jon Orr
money every year and you’ve never paid it back. You never pay the interest. And this is one of the benefits of this is you don’t have to pay it back. Okay. Now, if I borrow that every year for that number of years and I’m 70 years old and I die, then my family, after paying off that loan, still gets $3.7 million, which is more.

00;35;25;29 – 00;35;26;23
Jon Orr
Kyle Oh.

00;35;26;23 – 00;35;44;12
Kyle Pearce
Shoot. You know what? This is crazy. John We’re at year 70, which is age 95. Whoa, You said age 70. And I went to the Regal back to age seven. You go back going seven, going to age 70 here. Where are we? Age 70 is way back here. And it’s because my headers I copied and pasted poor headers.

00;35;44;12 – 00;36;10;01
Kyle Pearce
So you’ve done for 45 years. Okay, so you’ve done this for 45 years and this is our age over here. Holy smokes. Yeah. So your policy loan has grown to about $1,000,000, right? You’ve taken 45,000 out since. You know what? You did it from 55 to 70. You’ve done it for 15 years. That policy loan comes up to about $1,000,000.

00;36;10;08 – 00;36;45;16
Kyle Pearce
But the death benefits 4.3, almost 4.4 million. So subtract those two and you’re getting about 3.3 million. Now, the part that I think is worth I made that error showing the wrong line. And therefore John was talking about years 70, which is age 90, is that if you actually look at what happens here, based on our assumptions of $45,000 every single year, you’ll notice that your family actually your estate gets richer and richer as you increase the age until about age 90.

00;36;45;16 – 00;37;11;14
Kyle Pearce
So in like when at age 80, your loan is about 2.2 million and your state’s left with 3.66 million. I keep going. I get to age 90 and we’re at almost 4 million that they’re left with. So 3.89 million. And then you’ll notice after age 90, you’ll start to see that your estate actually starts to receive less and less.

00;37;11;14 – 00;37;31;08
Kyle Pearce
So I mean, you got lucky. You got to live longer than 90. But they’re getting unlucky because instead of 3.9 million, if you lived to 100, they’re only going to get 3.2 million. Oh, my God. Right. Shoot. Darn right. So just be careful because maybe friends and family might be looking to try to take you out. But no, I wouldn’t worry myself with that.

00;37;31;11 – 00;38;00;12
Kyle Pearce
Now, noting here we made some assumptions. The one thing that’s so beautiful about this, John, is that with a pension, with an annuity, right. Everybody loves annuities, everyone loves pensions, everyone seems to hate permanent life insurance. I’m trying to make a case for how this tool, if we are creative enough with it, which I would argue I like to consider myself to be some the most creative in the industry around how we can use these tools to better ourselves, better our families, better our legacy.

00;38;00;15 – 00;38;19;05
Kyle Pearce
And it only gets better for business owners inside of a corporation. When I look at this and you go with a pension, I’m getting that payout regardless of whether I need that money or not. So my pension is going to send me the 58,000 or 60,000. I’m going to get taxed no matter what, whether you like it or not.

00;38;19;07 – 00;38;40;12
Kyle Pearce
Here you don’t get taxed. That’s why we’re showing the after tax money coming out. So you’re getting net the same amount. But the interesting part is think of how this changes. If, let’s say maybe you only needed to take out 35,000 this year. Right now it’s like I’ve taken out less. Obviously I’m borrowing less. So therefore the net result is going to be more.

00;38;40;17 – 00;38;41;14
Jon Orr
True, true.

00;38;41;19 – 00;39;05;02
Kyle Pearce
So now I can take less income and my family, my estate can be left with more by doing so, but I can also adjust up. And you’ll notice here, if I can live to 100 pulling $45,000 per year and still leave $3.2 million to my estate, that’s nice and all, but you might be wondering, like, what if I want to change?

00;39;05;02 – 00;39;22;07
Jon Orr
Yeah, because I know that I’m income more lavishly. Could I spend $45,000 just on vacation and then not leave any of my family? A ton of a ton of money when I’m a hundred years old because I’m like, you know what? By the time I’m 100, my kids are going to be retired and their might even be like, You know what I mean?

00;39;22;07 – 00;39;25;24
Jon Orr
So it’s like, do I really need to leave the 3 million? Let’s play with the numbers so.

00;39;25;24 – 00;39;43;24
Kyle Pearce
We can talk about the die was zero book rate, right? It’s like exactly. Going to get to die was zero. Well, I pushed it up to $50,000 per year up until age 100, and I still have over 2 million left to my estate. What if I go to 55,000 and we go all the way down? You still look good.

00;39;43;27 – 00;39;46;02
Kyle Pearce
Ooh. 1.5 million.

00;39;46;04 – 00;39;48;21
Jon Orr
200. I did 100 age 100 at.

00;39;48;21 – 00;39;50;06
Kyle Pearce
Age 100. Yeah. So 60.

00;39;50;08 – 00;39;50;27
Jon Orr
A good amount.

00;39;50;27 – 00;39;52;01
Kyle Pearce
80,000.

00;39;52;03 – 00;40;12;08
Jon Orr
Keep in mind, in a way, this is $20,000 more than what your pension would be, Right? It’s almost like bringing you back to where you are now. If you’re a teacher, make $100,000 C4 income and you’ve been taking tax off. You’re probably looking at $60,000 of your current take home pay right now. Is there any money left to leave to your family at age 100?

00;40;12;15 – 00;40;20;22
Jon Orr
If you just kept you rolling that your take home never changed from where you retire to even before retire to age 100?

00;40;20;24 – 00;40;45;10
Kyle Pearce
Yeah, I’ve got 60,000 per year all the way to age 100. You’re still left with over half a million dollars. I’m going to push it even harder and noting, obviously, we can play with other assumptions here too, right? So if somebody is interested in this, we can run your scenario. What’s going to make you comfortable and confident at 65,000 it at year 100, we end up with a we finally hit that place.

00;40;45;10 – 00;41;07;13
Kyle Pearce
So between call it 62,000 ish or so, under these assumptions, you’re going to live to age 100 and break even. So you didn’t leave any money on the table. Now, let’s consider this. I always like to do these things to play like you might decide, Hey, well, what if it was $45,000 per year but interest rates stayed higher for the next five years?

00;41;07;15 – 00;41;26;04
Kyle Pearce
We can play with that scenario for you, right? If you think interest rates are going to be lower than the assumed five on average that I’ve shown here, whatever you want to do, we can craft that for you. We could look at, Hey, what have you think inflation’s going to be on average two or 3% over the entire span and you want your income to grow.

00;41;26;04 – 00;41;42;00
Kyle Pearce
In that way. We can explore all of those things to make sure that you’re comfortable and confident with all the what ifs. Because even though I would argue that this tool provides for some of the best guarantees, some of the best benefits.

00;41;42;01 – 00;41;45;11
Jon Orr
The money is guaranteed, right? Yeah, That’s one of the other things. Just like your pension was.

00;41;45;11 – 00;42;07;18
Kyle Pearce
It can’t go backwards, which is so beautiful. So it’s like, you know that you are going to get a return here, right? We don’t know exactly the exact return each year. It’s a dividend that’s declared they’ve paid dividends out since all of these companies were around. I mean, Sun Life, for example, has been the longest standing 150 years in business.

00;42;07;20 – 00;42;44;15
Kyle Pearce
This is all I would say, as best as you can get in terms of guarantees like an annuity with all kinds of additional benefits and features. I am still to this day shocked that I’ve gone down this rabbit hole. And first of all, the only thing I can conclude is that people haven’t gone as deep down the rabbit hole I have in this work, but if they have, they would not be able to make a claim like a Dave Ramsey claim that permanent life insurance is a waste and it’s a poor tool and it’s not worth it, and that only term insurance should be used for life insurance.

00;42;44;22 – 00;43;05;13
Kyle Pearce
Well, guess what, Dave? Term insurance cannot be used to replicate a pension. And here’s the other thing for Dave Ramsey. Maybe one day he’ll listen to this and he’ll reach out to us. But Dave Ramsey makes claims like he can make 12%. He says it all the time, 12% average return in mutual funds, which is not possible. It’s not a thing.

00;43;05;13 – 00;43;29;07
Kyle Pearce
It’s not consistent. And the question would then be who in their right mind wouldn’t do this? And then from day one, leverage in order to it into the mutual fund. So you can compound your compound growth. And the only reason why someone like Dave or anybody else wouldn’t do that with stocks is because they don’t have the confidence.

00;43;29;07 – 00;43;56;19
Kyle Pearce
Right. It’s like no matter what happened historically, you still are like, I don’t know what’s coming next. What if there’s a market crash? I’m emotional. I feel like I’m not secure. All of those things are reasons why people don’t do things in the markets. That’s the reasons why people don’t put enough money into RRSPs or don’t invest in the right things or make a poor decision to get out of a market when the market’s in a down cycle here for me anyway.

00;43;56;19 – 00;44;16;12
Kyle Pearce
And this might be different for some of our listeners. For me, by having my base case taking care of what it allows me to do. And this is my big takeaway. I’m curious to hear yours, John. My big takeaway from doing this process is I’ve always been looked at from my family friends as being a risk taker because I did real estate.

00;44;16;19 – 00;44;36;03
Kyle Pearce
When it’s the thing I know best, it’s the thing I’m most confident in. And I still didn’t feel secure enough. Where I wanted to have a base case because I’m like, What if I mess up? What if I make a mistake? We’re all human. Mistakes can happen. I’m like, This was my way to again take the place of that security.

00;44;36;03 – 00;45;02;26
Kyle Pearce
I felt in that golden handcuffs situation as a pensioned Ontario teacher that I can now recruit with this tool. And the best part about it for me is that I get to supercharge it in a way that my pension could never take care of me. Now I, also want to argue that I’m showing the apples to apples. How much money is going into this policy, just like what’s going into the teachers pension.

00;45;02;29 – 00;45;30;04
Kyle Pearce
My pension is much larger because of many of these aspects we told everyone about, which is the fact that I can leverage against it. So when I buy that next real estate property, I’m this tool to help me with that down payment so I can continue to grow my real estate portfolio while also growing my safety net here just in case because I want to feel good about it every night at bed.

00;45;30;06 – 00;45;51;04
Jon Orr
Yeah, it’s like, why wouldn’t you if you knew? And we’ve talked about this before you once, you know, you can’t go backwards and not knowing. It’s like once you know, you’re like, Well, what? I can’t figure out why not? And that’s where we’re at. We can’t figure out why you wouldn’t especially if you had the availability, if you wanted to reshift your budget change or like how do you restructure your budget to make this work, right?

00;45;51;04 – 00;46;10;16
Jon Orr
Because once you know, it’s like, how do I make this work? Because we talked about this example from starting when I 25, but we didn’t do this when we were 25. We had the teachers pension plan. But if you’re beginning out so here’s my big takeaway, Kyle, is that my children are in their teens and within ten years they’re going to be at that place of 25.

00;46;10;18 – 00;46;27;22
Jon Orr
And I can’t wait to help them craft this for them so that they can have the luxury, the safety net of having a pension without, say, going, I have to go get a pension job because that was the thing that it was in my family. It’s like, well, I don’t remember my parents saying like, which pension job you’re going to get.

00;46;27;22 – 00;46;45;17
Jon Orr
But it was like a big factor in where I got my job. It was like, Oh yeah, you get your pension. Now that’s an important piece of finding employment is make sure you get a pension along with it. And it’s like now because we’ve structured this and because we are going to structure this for our children, we don’t have to have that like handcuffed.

00;46;45;23 – 00;47;00;09
Jon Orr
You’re like, You want to be an entrepreneur, boom. You’ve got a pension that goes along with it. You want to start your own service business over here. I guess that’s being an entrepreneur. Boom, You want to go work over here that doesn’t provide a pension. Boom. We’re just going to recreate this scenario for you. So that’s my big takeaway.

00;47;00;09 – 00;47;22;24
Jon Orr
But the other big takeaway here, Kyle, to you is that if you’re like us, because we didn’t do this when we were 25, we’re in our forties and we’re making these changes. And if you’re like that to me, like I want that now, how do I move forward and have this? Because maybe I want to quit my job, or maybe I have, or maybe in my corporation, then reach out to us.

00;47;22;24 – 00;47;53;24
Jon Orr
Because with craft that unique situation for you, everyone’s job is different. Everyone’s got different access. Maybe it means we need to look at your budget and help you shift that. Maybe it means you’ve got this value over here that we can be like, Oh, we can attribute that here so we can do those shifts for you. So reach out to us at Canadian Wealth Secrets dot com or slash discovery book a call we’ll go through your unique situation will craft you a unique plan and then you can also walk away and start having these same benefits and having that safety net for your moves forward.

00;47;53;27 – 00;48;22;17
Kyle Pearce
I can’t wait John, for a follow up episode that we’re going to do. I’m actually hopping on a call here in about another 5 minutes with an entrepreneur, a business owner who is incorporated in those who have a corporation and they are earning income, especially the active income not passive income, but active income inside that corporation. Take what you just saw in just what you heard and totally blow it up, because now you get to pay with corporate tax dollars.

00;48;22;17 – 00;48;48;04
Kyle Pearce
That active rate on those first $500,000 of active income is at 12.2%. And that means like you’re getting to fund this thing inside the corporation instead of taking that salary out, taking it out, getting taxed on it, having to pay by having to pay CPP, paying it in the corporation, sure, it gets expensive to corp, but then you put it in the RSP and then you have to get and now it’s locked up in jail.

00;48;48;10 – 00;49;13;28
Kyle Pearce
We can take those 88 cent dollars and we can build this. And the beauty is the supercharging is phenomenal. And when it pays out upon death, it comes out tax free, the vast majority of it because of the capital dividend account. However, if that’s you, if you’re going wait a second, you’re telling me it gets better for me because I have a corporation, The answer is yes.

00;49;14;05 – 00;49;39;28
Kyle Pearce
And then we’ve got all kinds of handy unique strategies where you might not have to pay any personal taxes between when you start pulling that money and that final place when you move on to the next world. So super exciting stuff. I hope that this was a value to friends out there, people that may have heard that permanent life insurance is a bad investment using little bunny ears for those who aren’t watching on YouTube.

00;49;40;01 – 00;49;58;28
Kyle Pearce
Ultimately, at the end of the day, we don’t look at it as an investment. We look at it as a massive tool. Just like my pension was a massive tool for me to give me that safety net, except this tool does so much more and provides an opportunity for me to grow my generational wealth in my family and my estate.

00;49;59;01 – 00;50;07;23
Kyle Pearce
So if you want to learn more about it, reach out. Canadian Wealth secrets dot com forward slash discovery and we’ll be chat with you real soon.

00;50;07;25 – 00;50;24;02
Jon Orr
If you enjoyed what you heard here today, then we encourage you to share this podcast with a friend or family. Maybe it’s a business colleague, maybe someone that you know will get value from the conversation we had here today. Share this podcast with them in the way that you discovered it. If you’re on YouTube, share them on YouTube.

00;50;24;02 – 00;50;31;28
Jon Orr
If you are in, say, Spotify, share it there. Do us a favor and share this with someone you think we’ll get loads out of this episode.

00;50;32;05 – 00;50;50;13
Kyle Pearce
All right. Canadian Wealth Secrets Seekers Keep on Growing.

00;50;50;15 – 00;51;00;15
Jon Orr
Just a reminder, content you heard here today is for informational purposes only, you should not construe any such information or other material as legal tax, investment, financial or other advice.

00;51;00;18 – 00;51;22;13
Kyle Pearce
John Or is a mortgage agent with a bricks Mortgage license number m23006803. Kyle Pierce is a life licensed an accident and sickness insurance agent and wealth architect with the Pan Corp. team, which includes corporate advisors and the PAN financial group.

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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