Financial Planning for Independent Nurse Practitioners
Take Control of Your Financial Future
As an independent Nurse Practitioner, navigating your financial future comes with unique complexities. Our tailored planning empowers you to:
Reduce financial stress
Protect and grow your wealth
Make informed decisions for your career and family
Securing Your Financial Future
You’ve worked hard to build your career, but managing your financial future comes with its own set of challenges. Should you incorporate your practice? How do you save for retirement in the most tax-efficient way? What’s the best move for your pension? How do you protect yourself and your income from the unexpected?
Each of these decisions has long-term consequences, and making the right choices today can mean greater financial security, reduced tax burdens, and the freedom to focus on what matters most—your career, your family, and your future.
Here’s what you need to know to make informed, strategic decisions that set you up for success.
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Should You Incorporate?
Incorporating your practice as a Nurse Practitioner might seem like the right move, but the decision depends on your personal and financial circumstances. One of the biggest draws is tax efficiency—corporate tax rates are significantly lower than personal tax rates, which means you can keep more of what you earn. But if you're spending most of your income on personal expenses, the benefits of incorporation may not outweigh the costs.
Liability protection is another factor many NPs consider, though it’s important to know that a professional corporation doesn’t shield you from malpractice claims. If you have personal assets or significant business debt, incorporation can help create a layer of separation—but it shouldn’t be your only reason for making the switch.
Your future plans also play a major role. If you’re looking to buy a home, some lenders may not recognize corporate income the same way they do a traditional salary, making mortgage approval trickier. And if you have outstanding personal debt, it might make sense to focus on paying that down before incorporating.
Finally, compensation strategies can be a game-changer. You’ll need to decide whether to pay yourself a salary or dividends. A salary helps build RRSP contribution room and qualifies you for CPP benefits, while dividends may lead to a slightly lower tax burden but won’t contribute to CPP. With the added complexity of corporate tax filings and passive income considerations, having the right financial and tax professionals can make all the difference in ensuring incorporation works in your favour.
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How Do You Plan for Retirement?
Retirement planning is more than just saving money—it’s about making your money work for you in the most tax-efficient way possible. If you’re incorporated, you have the flexibility to keep profits inside your corporation and investing the. This can be a smart strategy, but with a catch: earning too much passive income inside your corporation can trigger higher tax rates, so careful planning is essential.
For those who prefer personal savings, a balanced approach works best. Paying yourself a salary builds RRSP contribution room, allowing for tax-deferred growth, while maximizing your TFSA offers tax-free investment earnings. If you've already maxed out these options, a non-registered investment account can be a great next step, providing additional room to grow your wealth.
And if homeownership is on your horizon, the First Home Savings Account (FHSA) is a new tool. Even if buying a home isn’t part of your immediate plans, using an FHSA now can give you tax advantages. No matter your approach, the key is to start early and take advantage of the right mix of tax-advantaged accounts to secure your financial future.
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What Should You Do With Your Pension?
When it comes to your previous employer’s defined benefit pension, the choice between taking a lifetime pension or a lump-sum payout (commuted value) isn’t always straightforward. The lifetime pension option offers the comfort of a steady, predictable income without investment risks. But if you’re confident in managing your investments—or have an advisor to guide you—a lump sum commuted value could generate higher returns over time.
This decision isn’t just about returns, though. Life expectancy plays a critical role—a lifetime pension could pay off significantly if you live longer than average. On the other hand, lump sums come with tax implications, and a large portion may be taxable if you don’t have enough RRSP room to shelter it.
For incorporated professionals, there’s another powerful option: the Individual Pension Plan (IPP). Unlike RRSPs, an IPP allows for higher contributions, especially for those over 40, and is funded by your corporation, offering tax deductions for your business. While it requires actuarial oversight and more administration, it can be a game-changer for long-term retirement security. Whether you stick with a pension, take the lump sum, or set up an IPP, the right strategy depends on your risk tolerance, financial goals, and how involved you want to be in managing your retirement funds.
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What Type of Insurance Do You Need?
Insurance isn’t just about protecting your income—it’s about protecting your future and loved ones from the unexpected. Life insurance ensures that your family isn’t left struggling with financial burdens like mortgage payments, debts, or lost income if something happens to you. While inexpensive term insurance can provide essential coverage, the right amount depends on deeply analyzing your personal and business needs.
But what if you face a serious illness? Critical illness insurance provides a lump sum payout that can cover medical treatments, alternative care, or time off work—helping you focus on recovery rather than finances. With a long list of covered illnesses, it’s a safety net that can make all the difference when life takes an unexpected turn.
Then there’s disability insurance—arguably the most crucial protection for independent medical professionals. With 1 in 3 Canadians experiencing a long-term disability before 65, having the right coverage ensures that an injury or illness doesn’t derail your financial future. The best policies cover your net income and include key features like cost-of-living adjustments (to keep up with inflation) and partial disability benefits (so you can gradually return to work). Disability insurance has many moving parts that can be customized to meet your specific needs today and as your practice grows.
Lastly, if you own a clinic, Business Overhead Expense (BOE) insurance can keep your practice afloat if you cannot work. Covering everything from rent to staff salaries, this type of coverage ensures that temporary health setbacks don’t turn into permanent business losses. For NNPBC members, there’s an added bonus—a 25% discount on RBC Insurance Professional Series disability insurance, making comprehensive protection even more accessible.
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Secure Your Financial Future Today
Start planning now to avoid costly mistakes and maximize your financial potential.
About Us
Westmount Wealth Management was established to meet the unique needs of high-net-worth families, business owners, and professionals who seek more from their wealth management partner.
With a commitment to excellence, we integrate sophisticated financial planning with pension-style portfolio management to deliver solutions aligned with each client’s unique objectives. As fiduciaries, we prioritize our clients above all else, ensuring every decision we make answers a single guiding principle: Is this the best choice for our client?
Proudly independent and employee-owned, Westmount Wealth Management serves clients across British Columbia, Alberta, and Ontario with an unwavering dedication to integrity and personalized care.
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