As we launch into the new year this is a time when many reconsider their situations. Call it new year’s resolutions, or turning over a new leaf, but the beginning of a new year often has us thinking of the future, both distant and immediate. So, what should you be focusing on in 2026? Depending on where you are at in life, the answer can be quite different, but often the key drivers of wealth are identical across life stages and individuals.

Net Worth

            Whether you retired a while ago, are about to finish your career, or are just getting started, the most impactful figure to anyone’s finances is their net worth. The calculation of net worth is simple: Assets – Debt = Net Worth. Do you know yours? If you are not much for closely tracking your spending and cash flows, net worth is a good barometer for your financial health that does not require reconciling each of your monthly statements. If you are not already keeping track of your net worth, the new year is a logical time to start. A simple spreadsheet or note on your phone will do the trick, or often banking apps have a feature to help you keep track of your net worth by referencing the accounts your bank can see and allowing you to add in other assets and debts that the bank might not be able to see.

            If you are retired, net worth offers a snapshot of your financial health. As you update it over time you will get a broader picture of how things are going. When we prepare a financial plan for our clients it always includes a net worth statement. In retirement this statement can help us to estimate what future tax burdens might arise or how future retirement income should be structured. Ultimately, it will help to plan for the estate, large deferred tax burdens can be planned for or tackled early, and complex transactions can be undertaken in advance like selling real estate, and projections of the final value of one’s estate can all be done to make plans for the future.

            For those people who are in the middle of their career or just getting started, keeping track of net worth provides more immediate feedback. A retiree is thinking about the (hopefully) distant future and their estate, while a person establishing themselves focuses on seeing their net worth grow in the immediate future. The two main levers this person can pull are either pay down debt or add to their assets. Which of these levers gets pulled is a personal choice and will require both personal insight and financial math. Paying down existing debt offers a guaranteed return on investment, but financial mathematicians often point out that historical rates of return indicate that often it is better to invest spare funds rather than pay off low interest debt. This financial math speaks nothing to the psychological weight of outstanding debts. Regardless, a person looking to see their net worth improve can focus on “putting one foot in front of the other” by simply hitting one or both levers.
 

Taxable income

            Where net worth is a long-term planning tool, keeping track of taxable income is all about the immediate future. For those folks just getting started, this means maximizing tax advantaged accounts like RRSPs, TFSAs, FHSAs, RESPs, and RDSPs. Each of these accounts serves a purpose and how you decide to prioritize them will depend on your specific circumstances. The beginning of the year is also a suitable time to review your pay and benefits at work. If you are not already taking advantage of employer matching programs, pensions, share purchase programs or anything else offered by your employer, consider getting involved. If the options are complex, confusing, or too time-consuming for you to tackle yourself, let us know and we would be happy to help.

            As you approach retirement your plans might look a little different. The closer you are to retirement the more you might wonder how best to proceed. Depending on your income level as your employment is ending, you may be looking at one of these scenarios: opting to keep excess cash on hand and readily available or saving RRSP room for use to offset big income in final working years from stock options or deferred share units. If you have significant holdings in your company’s stock, you may plan to divest a portion or all of it and this can result in significant gains to trigger, you might need to plan your other investing activity around this fact.

            If you are well and truly in the midst of retirement, then you probably have the most disparate list of income sources you have ever had in your life. CPP and OAS might be coming in from their government sources while you also collect pension income, investment income, and RRIF income from your former RRSPs. All of these moving parts have different impacts on your taxable income each year so it is important to have a plan for how all your income sources will work together to: 1. fund your lifestyle, and 2. minimize tax each year. Keep in mind that there are no fixed solutions in financial planning. If you have not already considered it, it is worth planning for how your income will change when you or your spouse passes away. There are immediate changes like survivors’ pensions and the loss of CPP from the deceased, and then there are the more nebulous changes like increases in taxes and potentially an OAS claw back.

Factors you can control.

            Finally, a word about the world at large. With all that is driving the news in the early days of 2026, it is crucial that we all remember that there is no sense in worrying about matters outside of our control. The geopolitical climate, politics here at home, and economic uncertainty are all in the category of things none of us can directly control. What we can control is our own emotional response to these events and our day-to-day actions. Do what you can today to take control of your own net worth and taxable income and let the rest handle itself. When it comes to an investment portfolio it is easy to get caught up in catastrophizing that the sky is about to start falling, but borrowing trouble does nothing to improve the state of the world.

            In conclusion, there are various items one can focus on when it comes to their financial health in the new year. Importantly we should all focus on those elements we have control over. When it comes to taxable income and one’s net worth, planning is key. If you haven’t already had a financial plan prepared or you would like to revisit yours, let us know and get in touch at www.kozakfinancialgroup.ca