Your business is your retirement plan. Here’s how to make it worth what you need

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Image by Pexels/Zeynep Sude Emek

By Arvin Mondano

Special to Financial Independence Hub

In a recent Findependence Hub roundup on FIRE, Loretta Kilday of DebtCC said most FIRE folks she’s encountered “don’t actually stop working; they stop working for someone else.” Business owners made that move years ago, which leaves them with a different retirement problem: for many of them, the company is the nest egg. The RRSP got whatever was left after payroll, and the plan has always been to sell.

That plan works when the sale price covers the retirement. It fails quietly when the owner learns what a buyer will pay only after deciding to retire. The fix is to run the numbers the other way around, years before you list.

Start with the number your retirement needs

Begin with the income you want, not the price you hope for. Say you need $60,000 a year on top of CPP and OAS. Using the 4% rule as a rough guide, that takes a portfolio of about $1.5 million. If your RRSP, TFSA and other savings already hold $400,000, the sale has to deliver roughly $1.1 million after tax, legal costs and any broker’s commission.

Your accountant can turn that into a pre-tax sale price. For this example, call it $1.3 million. What matters is having a target before you ever have an asking price. Owners who skip this step tend to price on what the business means to them. Buyers price on what it earns.

What buyers actually pay for

Buyers of owner-run businesses price them on the seller’s discretionary earnings, or SDE: pre-tax profit plus the owner’s salary and perks, plus one-time and non-cash expenses. It’s the cash flow a single owner-operator could take out of the business in a year.

The price is a multiple of that figure. Most small, owner-operated businesses in Canada sell for somewhere between two and three and a half times SDE. Where yours lands depends on how clean the records are, whether earnings are rising or falling, whether a few big customers make up most of your sales, and how much the business depends on you.

Now run your retirement math against it. Divide the price you need by a realistic multiple and you get the SDE the business has to show. At a multiple of 2.5, a $1.3 million sale needs about $520,000. If the business shows $350,000, it’s worth closer to $875,000, which leaves a $425,000 hole in the plan. Far better to find that out now than in the first offer.

The add-backs buyers accept, and the ones they don’t

Add-backs are where most price arguments start, because every dollar of SDE is worth two dollars or more of price. Buyers generally accept the ones they can verify: your own salary and benefits, personal costs run through the business such as a vehicle or phone, true one-time expenses like a legal settlement or a move, and depreciation and interest. Continue Reading…

Check your family’s Aeroplan points before November 30

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Image by Pexels: Francesco Ungaro

By The Points Standard

Special to Financial Independence Hub

If you have an Aeroplan account you haven’t touched in a while, mark November 30, 2026 on the calendar. Under Air Canada’s current notice, that’s when its normal points expiry policy resumes after a long pause. Points are protected through November 29.

Under the normal rule, an account with no qualifying activity for 18 consecutive months loses its entire balance, unless an exemption applies. November 30 is the date to watch for accounts already past that limit; it isn’t everyone’s expiry date.

For people who collect points actively, this won’t matter. It matters for the balances nobody is watching: the account built up over a working life of business trips, the one a spouse opened for a single vacation, and the one belonging to an elderly parent who hasn’t flown in years. Those accounts can hold points worth keeping, even if nobody is planning a trip.

What a dormant balance is worth

Points feel like play money until you put a price on them. At The Points Standard we publish a monthly dollar valuation of Canadian points programs. Our current Aeroplan estimate is 1.9 Canadian cents a point for an informed flight redemption, with a baseline estimate of 1 cent. These are estimates of travel value, not cash balances or guaranteed redemption rates.

At those estimates, 50,000 points represents about $500 to $950 in travel value, and 150,000 points about $1,500 to $2,850. Actual value depends on the booking. Few of us would want to lose that much simply because an account was inactive.

Who is safe

Two groups don’t have to worry while their standing lasts:

  • Primary cardholders of an Aeroplan credit card. If you hold a TD, CIBC or American Express Aeroplan card as the primary cardholder, with the applicable accounts in good standing, your points don’t expire. That includes the no-fee CIBC Aeroplan Visa. Being an additional cardholder doesn’t protect your own Aeroplan balance.
  • Aeroplan Elite status members (25K and up), for as long as the status lasts.

Everyone else is on the 18-month clock.

How to find your own date

Use the website for this check. Air Canada’s published instructions say to sign in to your Aeroplan dashboard, select Activity, and scroll down to the points inactivity date. If you can’t find a date, contact Aeroplan to confirm your account’s status and deadline. Don’t assume the app uses the same path, or that a missing date means your points are protected. Continue Reading…

Retired Money: Book Review of David Booth’s Stay Calm

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As we telegraphed in the September installment of my MoneySense Retired Money column, this month’s column is a book review of David Booth’s Stay Calm, published early in September. For the full review in the October column, click on the highlighted headline: The calming genius of passive investing.

David Booth is founder of Dimensional Fund Advisors (DFA), maker of DFA Index Funds and DFA ETFs. I have long invested some of our family’s money in DFA funds, along with many of the other usual indexing suspects.

They are famously champions of taking a passive set-it-and-forget it approach to investing while minimizing the noise of what they have dubbed “financial pornography” propagated by traditional and social media, and the self-appointed experts who claim they can pick individual stocks or consistently time the markets.

As someone who takes a decidedly hybrid approach to investing in ETFs in various asset classes, — and occasionally indulging in a bit of high-conviction “index skimming” — I found Booth’s Stay Calm to be a refreshing reminder of the sound principles that underlie DFA.

Those who need a refresher on the virtues of passive investing will not be disappointed but as the book’s subhead implies, there are also quite a few lessons about embracing uncertainties in life in general, as well as investing in particular.

Stay Calm was published early in September by Authors Equity and is aptly subtitled “Learn to Embrace Uncertainty in Investing and Life.”  The book is divided into three main parts. Part 1 is on the science of investing and covers the Gift of being an Outsider, how Markets work and how to harness public markets. Part 2 is titled “The Mindset to Stay Calm” and the four chapter titles all make for excellent bullet points; Flexibility is the key to navigating Life’s Uncertainties; Don’t Predict, Plan; Control what you can control and manage what you can’t; and Tune out the Noise.

Continue Reading…

Is a Self-Directed IRA right for you? 7 Questions every investor should ask

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By Donnell Stidhum, Self Directed Retirement Plans LLC 

Special to Financial Independence Hub

A self-directed IRA has become one of the most talked-about retirement accounts among investors looking for greater control over how they build wealth.

The appeal is easy to understand. Unlike many traditional retirement accounts that limit you to stocks, bonds and mutual funds offered by a brokerage, a self-directed IRA can provide access to a much broader range of investments, including real estate, private lending, private equity and certain precious metals, provided IRS rules are followed.

But here’s what I tell people during our conversations: having more investment choices doesn’t automatically mean a self-directed IRA is the right choice for you.

Over the years, I’ve seen investors open these accounts because they heard someone made money buying rental properties or investing in private companies. Unfortunately, some discover too late that the flexibility also comes with greater responsibility.

Before opening a self-directed IRA, I encourage people to slow down and ask themselves seven important questions:

1.) Do I understand the investment I’m buying?

This is always my first question.

A self-directed IRA allows you to invest beyond publicly traded securities, but it doesn’t eliminate investment risk. In fact, many alternative investments require even more due diligence because they aren’t traded on public exchanges and often have less transparency.

If you can’t clearly explain how an investment makes money, what could cause it to lose value and how you’ll evaluate its performance, you’re probably not ready to place retirement dollars into it.

Retirement investing isn’t about chasing opportunities. It’s about making informed decisions

2.) Am I looking for flexibility or simply chasing higher returns?

Many investors assume that because a self-directed IRA offers more choices, it must produce better returns.

That’s not how investing works.

The account itself doesn’t create performance. The investment decisions do.

I’ve met investors who have built substantial retirement wealth using traditional index funds. I’ve also met investors who have done exceptionally well with real estate inside a self-directed IRA. The difference wasn’t the account, it was their knowledge, discipline and long-term strategy.

Choose the account because it fits your investment approach, not because it promises bigger returns.

3.) Can I follow the IRS rules?

This is where many investors underestimate the complexity.

The IRS allows a wide range of investments, but it also has strict rules governing prohibited transactions and self-dealing. For example, you generally can’t use IRA-owned property for your personal benefit or engage in certain transactions with yourself or other disqualified persons. Violating these rules can jeopardize the account’s tax-advantaged status.

The rules aren’t designed to discourage investing. They’re designed to preserve the integrity of retirement accounts.

Before investing, understand the rules as carefully as you study the opportunity itself.

4.) Is this investment liquid enough for my retirement plan?

Liquidity is often overlooked.

Suppose your retirement account owns a rental property or a private business interest. Those assets may take months, or even longer, to sell.

That doesn’t necessarily make them poor investments, but it does mean your retirement strategy should include enough liquidity to meet future needs.

A diversified retirement portfolio shouldn’t leave you scrambling for cash because every investment is tied up in long-term assets.

5.) Am I properly diversified?

One of the biggest mistakes I see is concentration.

An investor becomes excited about real estate and moves nearly all of their retirement savings into a single property.

Another puts everything into one private company.

Diversification still matters. Continue Reading…

Early Retirement Healthcare in Canada: What are our options?

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Image courtesy Tawcan/unsplash
 By Bob Lai, Tawcan

Special to Financial Independence Hub

As we are getting closer and closer toward our goal of early retirement, we have been doing a lot of projections, calculations, and planning. While it’s somewhat easy to estimate our income and expenses in early retirement, one thing that has been creeping in the background that we may have ignored over the years is health coverage in early retirement.

To be more specific, what do we do with health coverage gaps in early retirement? Health coverage is one of the critical expenses that everyone must factor into his or her retirement budget.

Fortunately, thanks to universal health care in Canada, healthcare expenses aren’t as scary and uncertain compared to those in the U.S. But what happens to health expenses like prescription drugs, dental care, vision care, and paramedical care that aren’t typically covered by the provincial and territorial health care?

I thought it’d be worthwhile to do some research and find out what our options are.

Please note, this post is based purely on my online research and I will focus on coverage for BC specifically. For those readers who are retired or have done more research on healthcare coverage in early retirement in Canada, I would love to hear from you in the comments section below.

Our current situation

Unlike what many Canadians believe, our universal healthcare system doesn’t cover everything.

When you are working, your employer typically offers extended health benefits, which give you access to extended healthcare options.

Take our family, for example. Thanks to my full-time job, my employer offers extended health care insurance via SunLife. We have three different extended health care options to pick from: Your Choice, Traditional, and Enhanced, with each option covering a different amount of extended health care and each option has different premiums..

After some calculation, we picked the Enhanced coverage for our family and with this coverage, we pay $78.83 every two weeks, $170.89 per month, or $2,049.58 per year for extended health and dental benefits.

The Enhanced coverage gives us the following extended health coverages:

  • 100% coverage on generic prescription drugs
  • Semi-private hospital room type
  • 100% unlimited maximum, 60-day trip duration for out of country emergency coverage
  • $1,000 per year up to a combined maximum of $1,700 for various paramedical services (i.e. massages, naturopaths, acupuncture, chiropractors, counsellors, etc)
  • $1,500 per year for physiotherapists
  • $400 every 24 months for vision care for adults, $400 every 12 months for children
  • 100% coverage for preventative dental care up to $2,000 for the benefit year, 65% coverage for major restorative, and 50% coverage for orthodontics for a $2,500 lifetime maximum

Since we’re paying for the extended healthcare, we try to take full advantage of our paramedical, vision, and dental benefits every year.

For the most part, we haven’t needed to use the prescription drug benefit. We have used the physio benefits here and there (as in a few years ago when my back was bothering me).

The BC Provincial Healthcare

The Medical Service Plan (MSP) is BC’s health insurance program that pays for required medical services. Here in B.C., the MSP covers the following medical benefits:

  • Doctor visits and hospital stays
  • Maternity care provided by a physician or a midwife
  • Medically necessary surgeries and procedures
  • Diagnostic tests and X-rays
  • Annual eye examination for children aged 0-18 and seniors aged 65+
  • Some mental health services

I believe other provinces and territories have similar medical plans covering similar benefits as well.

When you live in B.C., you are required to enroll in the MSP. Years ago, you needed to pay MSP premiums based on your income. But the premiums were eliminated on January 1, 2020. In case you’re wondering, the MSP is now funded through general taxation. The fact that BC MSP has no monthly premium means it is one less expense to consider in early retirement.

However, as you can see, the BC MSP does not cover things like prescription drugs, dental care, vision care, paramedical care, and physiotherapy. This is where the extended health coverage may be necessary in early retirement.

When it comes to BC MSP, there’s not much you need to do when you retire. To qualify for the BC MSP, you just need to maintain B.C. as your primary residence and the coverage continues automatically as long as you remain a B.C. resident.

Extended Healthcare in early retirement Option 1: Self funding

The easiest way when it comes to extended healthcare in early retirement is to self fund all the different services. So instead of having extended health insurance covering dental care, vision care, and paramedical services, we would simply pay for these services as needed.

The nice thing with self funding these expenses is that most of these expenses like massages, physiotherapy, dental care, and vision care, are considered as eligible medical expenses so we can claim them on our tax return and potentially reduce the tax that we may have to pay.

Right now, since we’re paying extended health premiums, we are having dental, vision, and paramedical services like massage and acupuncture regularly to max out our eligible benefits. If we go with the self funding route in early retirement, perhaps we would reduce the overall extended healthcare expense amount by only spending on what we deem as essential services. For example, rather than going for a massage every month, perhaps we would go every two or three months instead.

Extended Healthcare in early retirement Option 2: Government & private coverages

Although self funding is an option, it might be better if we can get extended healthcare coverage via a combination of government benefits and private extended health insurance.

BC’s Fair PharmaCare

One thing that’s interesting for early retirees in B.C. is that the province offers an income-based drug coverage program called Fair PharmaCare.

Under Fair PharmaCare, all BC residents are eligible if they have MSP coverage and meet the income level requirements. The program covers some prescription drugs, medical devices, and pharmacy services. You can find more about what BC PharmaCare covers here. Basically, Fair PharmaCare is based on your family’s net income from two years ago. You have to pay a deductible first then Fair PharmaCare covers 70% (or 75% if someone in your family was born before 1940). Once you hit the family maximum, Fair PharmaCare pays 100% of the eligible costs for the rest of the year. You can find the family deductible amount here. 

Fair PharmaCare is a good option for early retirees in BC if you need coverage for prescription drugs. In our case, this may not be as important (*knock on wood*).

The Canadian Dental Care Plan

For dental care, early retirees may be eligible for the Canadian Dental Care Plan (CDCP). The CDCP is a Canadian federal government program designed to provide access to affordable dental care for eligible Canadians who do not have access to dental insurance. Early retirees under the age of 65 are eligible if the household income is under $90,000.

The CDCP covers a variety of dental services:

  • Preventive care like cleanings
  • Diagnostic services like exams and X-rays
  • Restorative treatments
  • Surgical removal of tumours and cysts

Now, the CPCD will only cover over 100% of eligible dental expenses if the adjusted family net income is lower than $70,000. If your family’s net income is between $70,000 and $90,000, you will need to cover the co-payment portion.

Private Health Insurance Options

Another option is to go through private health insurance. This might make sense for our household to cover out-of-pocket costs for dental care, vision care, and paramedical services. If I look at our past extended health expenses over the last few years, I noted that we have spent anywhere between $5,000 and $8,000 (most of these expenses were reimbursed by our extended healthcare plan). Therefore, for our household, it may make sense to utilize the private health insurance option rather than self-fund these expenses.

Based on the market rates I found during my research, the average monthly premium per person is between $60 to $150. This is a wide range because the monthly premiums are based on your age. For someone in their 40s, the premiums are between $60 to $80 per person.

Again, these are the average ballpark figures. The actual cost will depend on age, health, location, and the level of coverage you choose.

For the most part, private health insurance options in Canada are offered by SunLife and Manulife.

SunLife’s private health insurance is called SunLife Health Insurance and there are three coverages – basic, standard, and enhanced. All of them are very similar to what my employer’s extended health offers (not a surprise since my employer uses SunLife). The per month cost, however, seems to be much higher than what we currently pay ($411.27 per month for the enhanced plan or $4,935.24, more than double the amount we’re paying under my employer’s extended health plan).

Manulife’s private health insurance is called Manulife Health Insurance and offers different plans, including Flexcare Plans and Guaranteed Issue Enhanced. 

For both SunLife and Manulife, the cost of the extended health insurance plans varies depending on the coverage. However, from what I can find, the per month cost for our family is much higher than what we are paying right now.

Continue private health insurance via an existing employer plan

Interestingly, both SunLife and Manulife offer options to convert a group employer plan to an individual plan. Basically, if you’re leaving an employer group plan, you can do the conversion within 60-90 days without medical underwriting or testing.

This means we can convert our existing SunLife group extended health plan to an individual plan without answering any medical questions, health exams, and pre-existing conditions are covered.

Now, if you miss this 60-90 day window, you will need to face medical underwriting, higher premiums, or exclusions for pre-existing conditions. Obviously, this is not very desirable.

The group to individual conversion is highly attractive for us once we are in early retirement. I will need to follow up with my company’s HR team to find out more information without raising too many red flags… another option is to contact SunLife to find out more information.

Our current strategy for healthcare in early retirement

Looking at the different options available, here’s our current healthcare strategy when we retire early: Continue Reading…