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Introduction
Introduction
If you are reading this guide, chances are that you have some questions about your financial future and preparing for retirement. You probably realize that there are some things you don’t know about planning for retirement, and you understand the importance of speaking with qualified professionals about your finances now so you can be ready for the next chapter of your life, will help.
If you are reading this guide, chances are that you have some questions about your financial future and preparing for retirement. You probably realize that there are some things you don’t know about planning for retirement, and you understand the importance of speaking with qualified professionals about your finances now so you can be ready for the next chapter of your life, will help.
This guide can help answer some of the questions you may have about retirement planning. Knowing your monthly income is a great first step, but to make sure you’re financially prepared for retirement, you’ll need to understand how your Financial strategy should change as you get older as well as how to adjust your objectives to help ensure you have enough money to afford to live the life you want once you stop working.
This guide can help answer some of the questions you may have about retirement planning. Knowing your monthly income is a great first step, but to make sure you’re financially prepared for retirement, you’ll need to understand how your Financial strategy should change as you get older as well as how to adjust your objectives to help ensure you have enough money to afford to live the life you want once you stop working.
Whether you’re planning to retire in the next few years or you’re thinking about making the leap even sooner, this guide can help.
Whether you’re planning to retire in the next few years or you’re thinking about making the leap even sooner, this guide can help.
While no retirement planning guide can take the place of a qualified financial adviser, this guide can help you clarify what you want for your retirement and provide the foundation for you to begin planning for that future
While no retirement planning guide can take the place of a qualified financial adviser, this guide can help you clarify what you want for your retirement and provide the foundation for you to begin planning for that future
Whether your planning to retire in the next few years or your thinking about making the leap even sooner.
Whether your planning to retire in the next few years or your thinking about making the leap even sooner.
This Guide will help you
This Guide will help you
STEP 1: IDENTIFY YOUR ASPIRATIONS
STEP 1: IDENTIFY YOUR ASPIRATIONS
Planning for retirement is not a one size fits-all solution. Everyone has their own unique goals and vision for what a life without work will look like. Each person imagines a different future, and those variations can add up to quite a difference in the amount of money you need in order to retire successfully and comfortably. Although that figure will likely vary by individual, a traditional approach to retirement planning is to look at your current income and take a percentage of that, usually around 80 percent. This is approximately how much most people will need to sustain their lifestyles in retirement. However, from there, it gets a bit more
Planning for retirement is not a one size fits-all solution. Everyone has their own unique goals and vision for what a life without work will look like. Each person imagines a different future, and those variations can add up to quite a difference in the amount of money you need in order to retire successfully and comfortably. Although that figure will likely vary by individual, a traditional approach to retirement planning is to look at your current income and take a percentage of that, usually around 80 percent. This is approximately how much most people will need to sustain their lifestyles in retirement. However, from there, it gets a bit more
complicated. For instance, if you have a house you intend to pay off before you quit your job, your monthly expenses will go down by your mortgage amount, which could be a big decrease. On the other hand, if you are planning on selling your current home and buying another, you may see only a slight reduction in your living expenses. At the same time, your expenses could also increase dramatically if you plan on spending your golden years travelling or if you have thoughts of golfing all day.
complicated. For instance, if you have a house you intend to pay off before you quit your job, your monthly expenses will go down by your mortgage amount, which could be a big decrease. On the other hand, if you are planning on selling your current home and buying another, you may see only a slight reduction in your living expenses. At the same time, your expenses could also increase dramatically if you plan on spending your golden years travelling or if you have thoughts of golfing all day.
Understanding these personal preferences can mean the difference between being able to have a comfortable retirement and having one that leaves you wanting more out of retirement. Today, we live in a world where just about anything is possible — if you plan for it.
Understanding these personal preferences can mean the difference between being able to have a comfortable retirement and having one that leaves you wanting more out of retirement. Today, we live in a world where just about anything is possible — if you plan for it.
Planning for Retirement is not a one-size-fits-all Solution
Planning for Retirement is not a one-size-fits-all Solution
How do you think you would like to spend your days?
How do you think you would like to spend your days?
This is why the first step in preparing for retirement is to think about the life you want to lead after you retire. Ask yourself questions about what you want to do in your later years. How do you think you would like to spend your days? Have you thought about where you will live? Now, expand that. We always encourage our clients to think outside the box. If you had complete freedom and money wasn’t an option, what would happiness and adventure look like for you? The answer to this question is going to be different for everyone, but there are some points for you to consider:
This is why the first step in preparing for retirement is to think about the life you want to lead after you retire. Ask yourself questions about what you want to do in your later years. How do you think you would like to spend your days? Have you thought about where you will live? Now, expand that. We always encourage our clients to think outside the box. If you had complete freedom and money wasn’t an option, what would happiness and adventure look like for you? The answer to this question is going to be different for everyone, but there are some points for you to consider:
VACATION
VACATION
As wonderful as retirement life can be, you may want to go on vacation from time to time. There will be weekends away and trips to visit children and grandchildren for holidays or just because. You might also have some bucket-list trips you would like to take, such as a road trip down Route 66 or a few months touring Europe. These vacations, however long they last, add quality to your life, but they also cost money, and unlike the trips you took while working, you can’t just work a few extra hours to recoup the difference between what you budget and what you actually spend. Take some time to think about how often you’d like to get away for a holiday.
As wonderful as retirement life can be, you may want to go on vacation from time to time. There will be weekends away and trips to visit children and grandchildren for holidays or just because. You might also have some bucket-list trips you would like to take, such as a road trip down Route 66 or a few months touring Europe. These vacations, however long they last, add quality to your life, but they also cost money, and unlike the trips you took while working, you can’t just work a few extra hours to recoup the difference between what you budget and what you actually spend. Take some time to think about how often you’d like to get away for a holiday.
Then, there are the “opportunity vacations.” After all, you will have all the free time in the world after you retire. If you see a deal to tour some
Then, there are the “opportunity vacations.” After all, you will have all the free time in the world after you retire. If you see a deal to tour some
islands or visit a part of the country that has always captured your imagination, you may be tempted to stray from your budget, so you will need some discretionary vacation savings too. Try to come up with a sort of schedule for your retired life, and add up how much taking all these vacations will cost. Ideally, you should think about your dream list of places as well as the bare minimum of holidays you know you will take.
islands or visit a part of the country that has always captured your imagination, you may be tempted to stray from your budget, so you will need some discretionary vacation savings too. Try to come up with a sort of schedule for your retired life, and add up how much taking all these vacations will cost. Ideally, you should think about your dream list of places as well as the bare minimum of holidays you know you will take.
CHARITY
CHARITY
Next, spend some time thinking about charity. You may have certain causes that you care about or organizations that really matter to you. These charities add to your costs in retirement as well. As a retired person, you will be able to contribute to your favourite causes directly. For instance, once you aren’t working, you can give your time to these organizations. You may consider volunteering in an advisory role with your favourite charities, maybe serving on the board of directors or contributing your professional knowledge in a consulting role. However, most charities have just as much need for money as they do your time. There will be a variety of donation drives and annual contribution campaigns, and you’ll likely still want to give money to some of these
Next, spend some time thinking about charity. You may have certain causes that you care about or organizations that really matter to you. These charities add to your costs in retirement as well. As a retired person, you will be able to contribute to your favourite causes directly. For instance, once you aren’t working, you can give your time to these organizations. You may consider volunteering in an advisory role with your favourite charities, maybe serving on the board of directors or contributing your professional knowledge in a consulting role. However, most charities have just as much need for money as they do your time. There will be a variety of donation drives and annual contribution campaigns, and you’ll likely still want to give money to some of these
causes in retirement, especially if you have been a supporter of those organizations for many years. It is important that you account for these charitable donations. If a cause or an organization is especially important to you, you may also want to leave a gift in your will to that charity. Take a moment to think about whether this is important to you and, if so, how much you would ideally like to give. Remember, this is the time for you think outside the box. Imagine how you would like to handle charity in an ideal situation, be it your annual contributions or a sum you might leave to the organization. Also, consider the minimum amount you would feel comfortable giving. It is important to understand your thresholds if you are going to create a retirement plan that covers everything that is important to you.
causes in retirement, especially if you have been a supporter of those organizations for many years. It is important that you account for these charitable donations. If a cause or an organization is especially important to you, you may also want to leave a gift in your will to that charity. Take a moment to think about whether this is important to you and, if so, how much you would ideally like to give. Remember, this is the time for you think outside the box. Imagine how you would like to handle charity in an ideal situation, be it your annual contributions or a sum you might leave to the organization. Also, consider the minimum amount you would feel comfortable giving. It is important to understand your thresholds if you are going to create a retirement plan that covers everything that is important to you.
LEGACY
LEGACY
Leaving a legacy, something to carry on after you’re gone, is an important goal for many people. Aside from a charitable donation, a legacy is something that carries your name and the idea of you in perpetuity. While for some, that legacy will include something grand, such as a library named for them or a building extension, legacies can also be something far more personal and immediate. It may evenbe something you haven’t thought of yet. Have you ever wanted to pay for your grandchildren’s college? Or maybe grad school? Would you like to give you grandchildren a gap year, so they can travel before settling into their education? Do you have a child who has gone through some hard times? Maybe you would like to have your legacy be paying off his mortgage? A legacy may also be something more tangible. For instance, you may want to have all your photos
Leaving a legacy, something to carry on after you’re gone, is an important goal for many people. Aside from a charitable donation, a legacy is something that carries your name and the idea of you in perpetuity. While for some, that legacy will include something grand, such as a library named for them or a building extension, legacies can also be something far more personal and immediate. It may evenbe something you haven’t thought of yet. Have you ever wanted to pay for your grandchildren’s college? Or maybe grad school? Would you like to give you grandchildren a gap year, so they can travel before settling into their education? Do you have a child who has gone through some hard times? Maybe you would like to have your legacy be paying off his mortgage? A legacy may also be something more tangible. For instance, you may want to have all your photos
converted to a digital format so generations to come can relive your memories. Another alternative might be to pen a memoir or hire someone to write your life’s story. Whatever legacy you have in mind, the costs can be significant. For a retiree, the financial obligation can be significant without extra planning. As such, understanding the costs associated with your legacy is important to ensure you can leave the lasting dedication you want, so spend some time thinking about this as well.
converted to a digital format so generations to come can relive your memories. Another alternative might be to pen a memoir or hire someone to write your life’s story. Whatever legacy you have in mind, the costs can be significant. For a retiree, the financial obligation can be significant without extra planning. As such, understanding the costs associated with your legacy is important to ensure you can leave the lasting dedication you want, so spend some time thinking about this as well.
HOBBIES
HOBBIES
Another important thing to consider is your hobbies. Many of the activities you may plan to enjoy in your retirement will come with a price tag. Some hobbies may seem as though the costs would be minimal, such as running, but even these can really add up. For example, in running, you will need appropriate running shoes and replacements as often as once a year or more if you run regularly. You will also need workout clothing and possibly fitness trackers or a gym membership. You should calculate these expenses as well.
Another important thing to consider is your hobbies. Many of the activities you may plan to enjoy in your retirement will come with a price tag. Some hobbies may seem as though the costs would be minimal, such as running, but even these can really add up. For example, in running, you will need appropriate running shoes and replacements as often as once a year or more if you run regularly. You will also need workout clothing and possibly fitness trackers or a gym membership. You should calculate these expenses as well.
Some other hobbies with potentially significant costs include:
Some other hobbies with potentially significant costs include:
• Golf • Scrap-booking
• Golf • Scrap-booking
• Woodworking • Yoga
• Woodworking • Yoga
• Tennis • Gardening
• Tennis • Gardening
• Photography • Ballroom dancing
• Photography • Ballroom dancing
• Motorcycling • Cycling
• Motorcycling • Cycling
• Fishing • Camping
• Fishing • Camping
• Whatever your Heart always wanted you to do, but didn't have time for..
• Whatever your Heart always wanted you to do, but didn't have time for..
This is your Moment to DESIGN YOUR FUTURE
This is your Moment to DESIGN YOUR FUTURE
As you tally these costs, remember to include equipment costs, such as bicycles or a good camera, as well as maintenance fees, such as golf club memberships or photo processing. You should also include replacement costs. You will need to replace your hobby’s equipment periodically, possibly several times during your retirement.
As you tally these costs, remember to include equipment costs, such as bicycles or a good camera, as well as maintenance fees, such as golf club memberships or photo processing. You should also include replacement costs. You will need to replace your hobby’s equipment periodically, possibly several times during your retirement.
SECOND HOMES
SECOND HOMES
The next area to think about is relocation and vacation homes. Imagine for a minute whether you might like to move somewhere else for your retirement. Whether that dream location is across town or on the other side of the world, there will be costs associated with the move. You might also want to consider having seasonal homes or timeshares. You could live in different places for a week at a time or take up residence for whole seasons. Maybe you’d like a home in Costa Rica for the winter and spring and a home in Victoria, BC for the summer and fall. Or perhaps frequent moves are better for you. Some people in retirement like to take up residence in different cities for a few years at a time, whether to be close to a child or just to experience a place they’ve always enjoyed. You could decide
The next area to think about is relocation and vacation homes. Imagine for a minute whether you might like to move somewhere else for your retirement. Whether that dream location is across town or on the other side of the world, there will be costs associated with the move. You might also want to consider having seasonal homes or timeshares. You could live in different places for a week at a time or take up residence for whole seasons. Maybe you’d like a home in Costa Rica for the winter and spring and a home in Victoria, BC for the summer and fall. Or perhaps frequent moves are better for you. Some people in retirement like to take up residence in different cities for a few years at a time, whether to be close to a child or just to experience a place they’ve always enjoyed. You could decide
to live in Europe for a several years and then go to Prince Edward Island. Some people prefer to buy a house that lets them take their home with them wherever they go, be it a mobile home or a tiny house they can tow. However you imagine your living situation in retirement, now is the time to make those decisions and add up how much those plans will cost.
to live in Europe for a several years and then go to Prince Edward Island. Some people prefer to buy a house that lets them take their home with them wherever they go, be it a mobile home or a tiny house they can tow. However you imagine your living situation in retirement, now is the time to make those decisions and add up how much those plans will cost.
ARE YOU READY?
ARE YOU READY?
Your retirement is your reward for a lifetime of hard work. A little planning can take those years from ordinary to very comfortable. If you have questions about what YOUR retirement could look like, for YOUR unique circumstances, contact our office to book a consultation. We can help you review your options and identify how an Guaranteed Investment or annuity or life insurance can provide you with possibilities.
Your retirement is your reward for a lifetime of hard work. A little planning can take those years from ordinary to very comfortable. If you have questions about what YOUR retirement could look like, for YOUR unique circumstances, contact our office to book a consultation. We can help you review your options and identify how an Guaranteed Investment or annuity or life insurance can provide you with possibilities.
STEP 2: DETERMINE YOUR POST-RETIREMENT EXPENSES
STEP 2: DETERMINE YOUR POST-RETIREMENT EXPENSES
Once you have determined the life you want to lead as a retiree, you will need to determine your post retirement expenses. Even if you own your home, there will be regular outlays associated with that. While some of these expenses are easy to imagine, others will take some important consideration if you are going to adequately plan for your retirement. Here is a list of common post retirement expenses. Read through the list and think of your lifestyle.
Once you have determined the life you want to lead as a retiree, you will need to determine your post retirement expenses. Even if you own your home, there will be regular outlays associated with that. While some of these expenses are easy to imagine, others will take some important consideration if you are going to adequately plan for your retirement. Here is a list of common post retirement expenses. Read through the list and think of your lifestyle.
TAXES
TAXES
Taxes are an important cost for retired people and one that is often neglected in calculations. First, there are the taxes you have yet to pay. Many retirement savings plans are tax deferred. That means that your money is not taxed while it is accumulating, but once you begin taking withdrawals from it, taxes are due. Also, if you take withdrawals before age 60, you may be subject to an additional 36% federal tax penalty. It is important to start talking to a tax advisor early on to discuss what those taxes will be, and come up ways to help minimize your tax burden. Otherwise, you could see your retirement assets reduced by more than you thought. Keep in mind that you’re required to begin taking the required minimum distributions, or RMDs, from your retirement account once you’re over the age 71 (in December of that year). In addition to planning for how you will pay taxes on distributions from your retirement
Taxes are an important cost for retired people and one that is often neglected in calculations. First, there are the taxes you have yet to pay. Many retirement savings plans are tax deferred. That means that your money is not taxed while it is accumulating, but once you begin taking withdrawals from it, taxes are due. Also, if you take withdrawals before age 60, you may be subject to an additional 36% federal tax penalty. It is important to start talking to a tax advisor early on to discuss what those taxes will be, and come up ways to help minimize your tax burden. Otherwise, you could see your retirement assets reduced by more than you thought. Keep in mind that you’re required to begin taking the required minimum distributions, or RMDs, from your retirement account once you’re over the age 71 (in December of that year). In addition to planning for how you will pay taxes on distributions from your retirement
savings and on any other tax deferred savings you have accumulated over the years, you also have to plan for how your living circumstances may change. For instance, if you are married, right now you probably file your taxes jointly. Over time, that will change to filing single because of the death of one spouse. At that time, your tax expenses will also change. For this reason, it is important to plan for the tax rate with your spouse and without. You need to consider where you live as well. The difference in Provincial income tax rates can be significant Although a higher income tax rate is typically offset with lower sales tax or property tax, your unique situation may mean that you pay higher taxes in one province than another. While you may not want the tax rate to inform where you live in retirement, you do need to consider the tax burden you will have in all the places you intend to live after retirement.
savings and on any other tax deferred savings you have accumulated over the years, you also have to plan for how your living circumstances may change. For instance, if you are married, right now you probably file your taxes jointly. Over time, that will change to filing single because of the death of one spouse. At that time, your tax expenses will also change. For this reason, it is important to plan for the tax rate with your spouse and without. You need to consider where you live as well. The difference in Provincial income tax rates can be significant Although a higher income tax rate is typically offset with lower sales tax or property tax, your unique situation may mean that you pay higher taxes in one province than another. While you may not want the tax rate to inform where you live in retirement, you do need to consider the tax burden you will have in all the places you intend to live after retirement.
MORTGAGE OR RENT
MORTGAGE OR RENT
While in an ideal world, you should plan to retire without a mortgage or rent, for some people, this expense will be a necessity. Some people are simply too close to retirement and too far away from paying off their mortgages, while others are anxious to acquire additional properties, such as a second home or a timeshare, and they prefer regular payments to a lump sum. Whatever the case may be, if you think it will be easy for you to have a mortgage or rental payment and still live within your means, include it in your calculations.
While in an ideal world, you should plan to retire without a mortgage or rent, for some people, this expense will be a necessity. Some people are simply too close to retirement and too far away from paying off their mortgages, while others are anxious to acquire additional properties, such as a second home or a timeshare, and they prefer regular payments to a lump sum. Whatever the case may be, if you think it will be easy for you to have a mortgage or rental payment and still live within your means, include it in your calculations.
AUTO PAYMENTS
AUTO PAYMENTS
Ideally, you want to own your vehicle outright before you retire, but again, you may be in a situation that precludes this. You may have just taken out an auto loan and be close to retiring, or you may decide you want to buy your dream car without taking a chunk out of your savings. Alternatively, you may just find that a lease or auto loan works for your retirement plan. If this is the case, be sure to include auto payments in your monthly expenses. Consider also, even if your vehicles are paid off, that they likely will not last the length of your retirement. At some point, you may have to make the decision to buy another vehicle. If you have already budgeted some amount for an automobile down the road, be it to buy outright or in payments, it will make affording a vehicle much easier.
Ideally, you want to own your vehicle outright before you retire, but again, you may be in a situation that precludes this. You may have just taken out an auto loan and be close to retiring, or you may decide you want to buy your dream car without taking a chunk out of your savings. Alternatively, you may just find that a lease or auto loan works for your retirement plan. If this is the case, be sure to include auto payments in your monthly expenses. Consider also, even if your vehicles are paid off, that they likely will not last the length of your retirement. At some point, you may have to make the decision to buy another vehicle. If you have already budgeted some amount for an automobile down the road, be it to buy outright or in payments, it will make affording a vehicle much easier.
UTILITIES
UTILITIES
Utility costs should also figure into your retirement planning calculation. Carefully consider how much you are currently paying, and determine an average annual cost. Now, adjust this number for inflation. Over the years, your utilities may cost more than they do today, and you need to be prepared for those increases. In some cases, you may plan on downsizing, and this will change the figure you have set aside for your utilities. However, keep in mind that smaller homes, or even apartment living, do not always mean cheaper utilities
Utility costs should also figure into your retirement planning calculation. Carefully consider how much you are currently paying, and determine an average annual cost. Now, adjust this number for inflation. Over the years, your utilities may cost more than they do today, and you need to be prepared for those increases. In some cases, you may plan on downsizing, and this will change the figure you have set aside for your utilities. However, keep in mind that smaller homes, or even apartment living, do not always mean cheaper utilities
GROCERIES
GROCERIES
As you estimate your post-retirement expenses, you will need to consider how much you spend on groceries as well. Look at your receipts to see how much you have spent over the past few months. This will give you an average grocery cost. From here, you will need to adjust the cost. After all, you will probably be home more during retirement. For some people, this will mean eating lunches in, whereas you might have grabbed something on the go when you were working. This needs to be included in your estimates. Alternatively, you may intend to eat out more often or join a meal service. Whatever the case, be sure to adjust your post-retirement expenses accordingly. Again, be sure to adjust your grocery costs for inflation. Food prices likely will increase. You should plan for it rather than be surprised that year after year your grocery budget doesn’t stretch as far.
As you estimate your post-retirement expenses, you will need to consider how much you spend on groceries as well. Look at your receipts to see how much you have spent over the past few months. This will give you an average grocery cost. From here, you will need to adjust the cost. After all, you will probably be home more during retirement. For some people, this will mean eating lunches in, whereas you might have grabbed something on the go when you were working. This needs to be included in your estimates. Alternatively, you may intend to eat out more often or join a meal service. Whatever the case, be sure to adjust your post-retirement expenses accordingly. Again, be sure to adjust your grocery costs for inflation. Food prices likely will increase. You should plan for it rather than be surprised that year after year your grocery budget doesn’t stretch as far.
INSURANCE
INSURANCE
This is a great time to schedule an appointment to talk with your agent. Remember that you have auto insurance and home insurance as well as possibly life insurance, additional health insurance, long-term care insurance, etc. Make sure that you have all the discounts you can get, from senior rates and multi-line discounts to low mileage driving policies. You should review how those rates may change as you get older as well. This will give you an annual amount you will spend on insurance. In addition to adjusting for rising costs after retirement, you may also see your rates go up because you are getting older.
This is a great time to schedule an appointment to talk with your agent. Remember that you have auto insurance and home insurance as well as possibly life insurance, additional health insurance, long-term care insurance, etc. Make sure that you have all the discounts you can get, from senior rates and multi-line discounts to low mileage driving policies. You should review how those rates may change as you get older as well. This will give you an annual amount you will spend on insurance. In addition to adjusting for rising costs after retirement, you may also see your rates go up because you are getting older.
MEDICAL INSURANCE AND CO-PAYS
MEDICAL INSURANCE AND CO-PAYS
Once you have accounted for the costs of your insurance policies, you will also need to estimate your medical co-pays and care. outside of a severe illness, you will have annual checkups and possibly monthly co-payments to the pharmacy for medication. Even if you do not currently have a prescription, you may as you get older, and you will need to try to estimate those costs. Also, keep in Mind that you’ll likely need a few visits to a specialist. As you get older, a general practitioner may not be sufficient for your needs, especially if you develop certain illnesses or conditions.
Once you have accounted for the costs of your insurance policies, you will also need to estimate your medical co-pays and care. outside of a severe illness, you will have annual checkups and possibly monthly co-payments to the pharmacy for medication. Even if you do not currently have a prescription, you may as you get older, and you will need to try to estimate those costs. Also, keep in Mind that you’ll likely need a few visits to a specialist. As you get older, a general practitioner may not be sufficient for your needs, especially if you develop certain illnesses or conditions.
GAS AND AUTO MAINTENENCE
GAS AND AUTO MAINTENENCE
Gas and auto maintenance should figure into your post-retirement expense planning as well. While you won’t have the fuel costs or the wear and tear that driving to work each day involves, your vehicle will still need regular maintenance, from oil changes and tires to the occasional major repair. In addition, keep in mind that you will have lots of free time. You may end up driving more often than you do now, and the costs for that add up.
Gas and auto maintenance should figure into your post-retirement expense planning as well. While you won’t have the fuel costs or the wear and tear that driving to work each day involves, your vehicle will still need regular maintenance, from oil changes and tires to the occasional major repair. In addition, keep in mind that you will have lots of free time. You may end up driving more often than you do now, and the costs for that add up.
PET EXPENSES
PET EXPENSES
In addition to your personal expenses, remember to add up and estimate the amounts you will spend on the care of your pets as you get older. The costs of food and flea treatments can be significant, but they aren’t the only costs associated with pet ownership. You also have treats, toys and annual checkups to consider. You should have an emergency pet fund set aside as well, just in case.
In addition to your personal expenses, remember to add up and estimate the amounts you will spend on the care of your pets as you get older. The costs of food and flea treatments can be significant, but they aren’t the only costs associated with pet ownership. You also have treats, toys and annual checkups to consider. You should have an emergency pet fund set aside as well, just in case.
BIRTHDAYS AND HOLIDAY EVENTS
BIRTHDAYS AND HOLIDAY EVENTS
Another expense you need to estimate is how much you will spend on gifts, birthdays, anniversaries and holidays during your Retirement. Every little bit adds up. Be sure to include your spouse and children as well as grandchildren, dear friends, and nieces or nephews. Look at how much you have spent over the past few years on presents and celebrations, be it an elaborate dinner at home or a nice restaurant, and come up with an annual tally. Include the traditional gift giving holidays, such as birthdays and Christmas, but also events such Canada Day or Labour Day cookouts, Thanksgiving dinner and New Year’s Eve parties. You want to come up with a maximum spend per gift or holiday, and this too should be adjusted for inflation. With a little luck, your retirement may last 40 years. The same way that $50 today could buy a lot more four decades ago, that same spending amount may buy less than you’d like it to in your later years.
Another expense you need to estimate is how much you will spend on gifts, birthdays, anniversaries and holidays during your Retirement. Every little bit adds up. Be sure to include your spouse and children as well as grandchildren, dear friends, and nieces or nephews. Look at how much you have spent over the past few years on presents and celebrations, be it an elaborate dinner at home or a nice restaurant, and come up with an annual tally. Include the traditional gift giving holidays, such as birthdays and Christmas, but also events such Canada Day or Labour Day cookouts, Thanksgiving dinner and New Year’s Eve parties. You want to come up with a maximum spend per gift or holiday, and this too should be adjusted for inflation. With a little luck, your retirement may last 40 years. The same way that $50 today could buy a lot more four decades ago, that same spending amount may buy less than you’d like it to in your later years.
SPENDING CASH
SPENDING CASH
Now, after all these expenses, you still need to plan for your spending cash. Determine how much you want to have in a separate account for spending on anything for which you don’t want to or can’t budget. Set aside a weekly amount to pay for:
Now, after all these expenses, you still need to plan for your spending cash. Determine how much you want to have in a separate account for spending on anything for which you don’t want to or can’t budget. Set aside a weekly amount to pay for:
• Eating out
• Eating out
• Clothing and shoes
• Clothing and shoes
• Drinks or coffee with friends
• Drinks or coffee with friends
• Entertainment (i.e., theater tickets, ball games, concerts)
• Entertainment (i.e., theater tickets, ball games, concerts)
• Travel (i.e., train tickets, extra fuel, hotels)
• Travel (i.e., train tickets, extra fuel, hotels)
WHAT NOT TO INCLUDE
WHAT NOT TO INCLUDE
As you went over this list of common post-retirement expenses, you may have noticed a few of your current expenses are missing — and there is a reason for that. While everyone’s situation is unique and these may not be right for everyone, we offer these as general considerations as you plan for your retirement:
As you went over this list of common post-retirement expenses, you may have noticed a few of your current expenses are missing — and there is a reason for that. While everyone’s situation is unique and these may not be right for everyone, we offer these as general considerations as you plan for your retirement:
Credit Card Debt:
Credit Card Debt:
You should retire without credit card debt. If that isn’t currently part of your plan, we suggest you make it so. The interest you pay each month to keep a credit card balance, can be used for your other expenses. Instead, put aside money each month for an emergency fund, so that you are not left using your credit cards for unexpected expenses. Ideally, you use only credit cards to keep your credit score high and earn travel and cashback rewards.
You should retire without credit card debt. If that isn’t currently part of your plan, we suggest you make it so. The interest you pay each month to keep a credit card balance, can be used for your other expenses. Instead, put aside money each month for an emergency fund, so that you are not left using your credit cards for unexpected expenses. Ideally, you use only credit cards to keep your credit score high and earn travel and cashback rewards.
Mortgage Debt:
Mortgage Debt:
If at all possible, paying off your mortgage (and any other installment debt) before retirement may be a smart way to go. Canada Pension Contributions: Once you are retired, you will no longer be contributing to Canada Pension.
If at all possible, paying off your mortgage (and any other installment debt) before retirement may be a smart way to go. Canada Pension Contributions: Once you are retired, you will no longer be contributing to Canada Pension.
NEED HELP
NEED HELP
We have covered a good bit of ground under post-retirement expenses. These costs are included on the post-retirement planning worksheet available at our office. It will guide you through each expense and prompt you as to what to include. However, everyone’s situation is different. If you still have questions about your post-retirement expenses, call us. We are more than happy to address any concerns you have and provide clarification as needed. TOLL FREE 1-877-888-9403
We have covered a good bit of ground under post-retirement expenses. These costs are included on the post-retirement planning worksheet available at our office. It will guide you through each expense and prompt you as to what to include. However, everyone’s situation is different. If you still have questions about your post-retirement expenses, call us. We are more than happy to address any concerns you have and provide clarification as needed. TOLL FREE 1-877-888-9403
STEP 3 : INDENTIFY YOUR RISKS
STEP 3 : INDENTIFY YOUR RISKS
Planning for retirement can feel complicated.
Planning for retirement can feel complicated.
You have to consider the type of life you want to lead and add up how much that lifestyle will cost you. You also have to consider your regular post-retirement expenses. However, keep in mind that those concerns are your best case scenario.
You have to consider the type of life you want to lead and add up how much that lifestyle will cost you. You also have to consider your regular post-retirement expenses. However, keep in mind that those concerns are your best case scenario.
In retirement, your income is finite. While you could return to work if your expenses get too high, the reality is that by the time that happens you may not be able to work, might not be willing to put in the same long hours, or may be unable to earn the same income you did before hanging up your hat. Here are some of the risks you need to consider:
In retirement, your income is finite. While you could return to work if your expenses get too high, the reality is that by the time that happens you may not be able to work, might not be willing to put in the same long hours, or may be unable to earn the same income you did before hanging up your hat. Here are some of the risks you need to consider:
HEALTH-CARE
HEALTH-CARE
As you get older, health care will likely become a primary expense. According to CARP, a couple retiring in 2016 would need $240,000 to cover the medical costs they will likely incur in their lifetimes— and that is the average! This figure includes the cost of health insurance premiums and deductibles as well as prescriptions and those common health-related expenses not covered under a health insurance policy, such as hearing aids — but remember, it is just an average. Many people pay far more than $240,000 for their and their spouse’s health care during retirement.
As you get older, health care will likely become a primary expense. According to CARP, a couple retiring in 2016 would need $240,000 to cover the medical costs they will likely incur in their lifetimes— and that is the average! This figure includes the cost of health insurance premiums and deductibles as well as prescriptions and those common health-related expenses not covered under a health insurance policy, such as hearing aids — but remember, it is just an average. Many people pay far more than $240,000 for their and their spouse’s health care during retirement.
LONG-TERM CARE
LONG-TERM CARE
-Advisor 2016 Survey of Investors at Retirement, July 2016. Estimate based on a hypothetical couple retiring in 2017, 65 years old,with average life expectancy of 85 for a male and 87 for a female.
Much of the money spent on health care in later years is due to the need for long-term care, such nursing homes and assisted living. Roughly 70 percent of people who are 65 today will need some type of long-term care, and some 20 percent will require this care for more than five years.
Much of the money spent on health care in later years is due to the need for long-term care, such nursing homes and assisted living. Roughly 70 percent of people who are 65 today will need some type of long-term care, and some 20 percent will require this care for more than five years.
Most health insurance plans —whether they are those you pay For out of pocket, those provided by your employer, or Provincial and Federal aid — only cover a limited number of services, and you will have less choice regarding your care. When long-term care is covered, it is typically only for a short time and when deemed medically necessary. This means that if you prefer long-term care, such as moving into an assisted living facility when
Most health insurance plans —whether they are those you pay For out of pocket, those provided by your employer, or Provincial and Federal aid — only cover a limited number of services, and you will have less choice regarding your care. When long-term care is covered, it is typically only for a short time and when deemed medically necessary. This means that if you prefer long-term care, such as moving into an assisted living facility when
you are experiencing a minor mobility issue, you would have to pay for it yourself. While the costs associated with this type of care can be very high, they could be avoidable with a long-term care policy. For this reason, we often recommend that our clients self insure. You can choose either traditional long term care insurance or an guaranteed fund or annuity with a long-term care rider, which allows you to access and withdraw money from your annuity as long as the money is being used for qualifying long-term care. If long-term care insurance or annuity sounds like something you would be interested in, contact us and we can explain your options. The important part to remember is that long-term care insurance is INSURANCE. You can’t buy it if you are already “broken.” People who already use long-term care services, have had a stroke in recent years, have Alzheimer’s disease, have a neurological condition or have cancer usually cannot qualify for such a policy. Until recently... contact your agent TODAY.
you are experiencing a minor mobility issue, you would have to pay for it yourself. While the costs associated with this type of care can be very high, they could be avoidable with a long-term care policy. For this reason, we often recommend that our clients self insure. You can choose either traditional long term care insurance or an guaranteed fund or annuity with a long-term care rider, which allows you to access and withdraw money from your annuity as long as the money is being used for qualifying long-term care. If long-term care insurance or annuity sounds like something you would be interested in, contact us and we can explain your options. The important part to remember is that long-term care insurance is INSURANCE. You can’t buy it if you are already “broken.” People who already use long-term care services, have had a stroke in recent years, have Alzheimer’s disease, have a neurological condition or have cancer usually cannot qualify for such a policy. Until recently... contact your agent TODAY.
MEDICAL INSURANCE PREMIUMS
MEDICAL INSURANCE PREMIUMS
Once you turn 65, you will have additional insurance options, such as private senior plans. Some people drop their existing health insurance policies and go with these instead. While this will save you the existing monthly premium, there are still costs associated with these plans. The cost for health benefits vary in 2016 depending on the coverage you wish to have...
Once you turn 65, you will have additional insurance options, such as private senior plans. Some people drop their existing health insurance policies and go with these instead. While this will save you the existing monthly premium, there are still costs associated with these plans. The cost for health benefits vary in 2016 depending on the coverage you wish to have...
Keep in mind that your current health insurance plan may cover some things that a new policy does not. For this reason, many people purchase a gap policy to make up the difference. Medical prescription plans are an example of this. In either case, this is something you need to look at closely.
Keep in mind that your current health insurance plan may cover some things that a new policy does not. For this reason, many people purchase a gap policy to make up the difference. Medical prescription plans are an example of this. In either case, this is something you need to look at closely.
SUPPORT FOR ADULT CHILDREN
SUPPORT FOR ADULT CHILDREN
If you have a child with a disability, you may need to budget for his or her care as well, but for many retirees, support for adult children stems from another cause — hard times. It can be tempting to write a check to “make it all better,” but if you do that too often, you might not have enough money to last through your retirement. Setting boundaries now and communicating those to your adult children can help forestall issues later.
If you have a child with a disability, you may need to budget for his or her care as well, but for many retirees, support for adult children stems from another cause — hard times. It can be tempting to write a check to “make it all better,” but if you do that too often, you might not have enough money to last through your retirement. Setting boundaries now and communicating those to your adult children can help forestall issues later.
INVESTMENT RISK AND VOLATILITY
INVESTMENT RISK AND VOLATILITY
When you are planning for retirement, exposing your savings to investment risk and volatility is largely necessary. Yes, your Retirement savings fluctuate a little each day, but you also have the opportunity to amass greater returns than you would have without taking the risk, although the market does involve risk and offers no guarantees. A qualified advisor can show you some that have guarantees.. However, after you retire and as you get ready to make the move to retirement, there are other options that offer less risk exposure and more dependable income, such as guaranteed investment funds and annuities that have guarantees backed by the financial strength and claims paying ability of the issuing insurer.
When you are planning for retirement, exposing your savings to investment risk and volatility is largely necessary. Yes, your Retirement savings fluctuate a little each day, but you also have the opportunity to amass greater returns than you would have without taking the risk, although the market does involve risk and offers no guarantees. A qualified advisor can show you some that have guarantees.. However, after you retire and as you get ready to make the move to retirement, there are other options that offer less risk exposure and more dependable income, such as guaranteed investment funds and annuities that have guarantees backed by the financial strength and claims paying ability of the issuing insurer.
SEQUENCING RISK
SEQUENCING RISK
You should also be aware of sequencing risk. Put simply, how you take returns from your investments can have a big impact on how much you actually receive from your investments, especially in the earlier years of your retirement. "A fundamental challenge for retirees taking ongoing withdrawals from a portfolio is ‘sequence of returns” risk — the fact that even if markets average out to long-term returns eventually, if early returns are too low for too long, ongoing withdrawals can deplete the portfolio before the ‘good’ returns finally arrive,” explains Michael Kitces. “Notably, this issue does not apply if the portfolio has no withdrawals.” Basically, if you don’t touch the money, you give it time to recover from poor returns, such as a stock market bubble. However, when you depend on taking distributions from your retirement savings, sequencing risk is not something you can always avoid. You should discuss any concerns you have regarding your investment portfolio with a qualified professional who holds the appropriate registration.
You should also be aware of sequencing risk. Put simply, how you take returns from your investments can have a big impact on how much you actually receive from your investments, especially in the earlier years of your retirement. "A fundamental challenge for retirees taking ongoing withdrawals from a portfolio is ‘sequence of returns” risk — the fact that even if markets average out to long-term returns eventually, if early returns are too low for too long, ongoing withdrawals can deplete the portfolio before the ‘good’ returns finally arrive,” explains Michael Kitces. “Notably, this issue does not apply if the portfolio has no withdrawals.” Basically, if you don’t touch the money, you give it time to recover from poor returns, such as a stock market bubble. However, when you depend on taking distributions from your retirement savings, sequencing risk is not something you can always avoid. You should discuss any concerns you have regarding your investment portfolio with a qualified professional who holds the appropriate registration.
LONGEVITY RISK
LONGEVITY RISK
Retirees also face longevity risk. No matter how well you plan, there is always a chance that you will outlive your assets, resulting in a lower standard of living, reduced care or a return to employment. You can take steps to address this by by including a cushion in your retirement plans and having your retirement portfolio and strategy regularly reviewed by the appropriate finance professional.
Retirees also face longevity risk. No matter how well you plan, there is always a chance that you will outlive your assets, resulting in a lower standard of living, reduced care or a return to employment. You can take steps to address this by by including a cushion in your retirement plans and having your retirement portfolio and strategy regularly reviewed by the appropriate finance professional.
INFLATION
INFLATION
Planning for retirement is seldom straightforward. In addition to your changing lifestyle, you also have to account for the risks you face as you get older. Living longer, requiring additional assistance and paying for health care can be serious risks to your retirement nest egg. Investment risk and sequencing risk come into play, but inflation can be an equally important risk. Increases in the general cost of living are unpredictable, and that makes retirement a moving target as you make plans for what you’ll spend 10 to 30 years in the future. Adding an extra 3 percent per year (the average annual inflation rate) to your retirement planning calculations will help, but it doesn’t remove the risk of inflation altogether.
Planning for retirement is seldom straightforward. In addition to your changing lifestyle, you also have to account for the risks you face as you get older. Living longer, requiring additional assistance and paying for health care can be serious risks to your retirement nest egg. Investment risk and sequencing risk come into play, but inflation can be an equally important risk. Increases in the general cost of living are unpredictable, and that makes retirement a moving target as you make plans for what you’ll spend 10 to 30 years in the future. Adding an extra 3 percent per year (the average annual inflation rate) to your retirement planning calculations will help, but it doesn’t remove the risk of inflation altogether.
STEP 4: PLANNING FOR SURVIVORS AND HEIRS
STEP 4: PLANNING FOR SURVIVORS AND HEIRS
As you plan for retirement, you might also choose to plan for what happens afterwards. There are steps you can take on behalf of your survivors and heirs that will help ensure they are provided for after your passing and that you won’t be leaving them with a huge tax bill. Retirement planning is all about learning where the caveats are and creating a strategy to help minimize their impacts.
As you plan for retirement, you might also choose to plan for what happens afterwards. There are steps you can take on behalf of your survivors and heirs that will help ensure they are provided for after your passing and that you won’t be leaving them with a huge tax bill. Retirement planning is all about learning where the caveats are and creating a strategy to help minimize their impacts.
TAX EFFICIENCIES
TAX EFFICIENCIES
Planning for your survivors and heirs now can help them enjoy greater tax efficiencies. While you may already be aware of things you can do to make the transfer of your assets easier, extra steps such as adding a beneficiary to the title of your house makes transfer automatic and tax free while also helping your heirs avoid the cost and lack of privacy afforded by probate.
Planning for your survivors and heirs now can help them enjoy greater tax efficiencies. While you may already be aware of things you can do to make the transfer of your assets easier, extra steps such as adding a beneficiary to the title of your house makes transfer automatic and tax free while also helping your heirs avoid the cost and lack of privacy afforded by probate.
However, there are many other things you can do to introduce tax efficiencies for your heirs and survivors. For instance, you should always name beneficiaries on your retirement accounts, life insurance policies and other monetary assets. This way, the transfer is direct and, in some cases, payable on death. Also, consider how you structure your retirement savings. Heirs pay taxes on the money you have left in RRSPs and LIRAs at your passing. All things being equal, you will want to spend these investments first because your heirs will likely be in a higher tax bracket and will pay more on these if they inherit them. Other insurance and investment products, such as guaranteed investment funds, annuities and TFSAs, may not result in taxes for beneficiaries.
However, there are many other things you can do to introduce tax efficiencies for your heirs and survivors. For instance, you should always name beneficiaries on your retirement accounts, life insurance policies and other monetary assets. This way, the transfer is direct and, in some cases, payable on death. Also, consider how you structure your retirement savings. Heirs pay taxes on the money you have left in RRSPs and LIRAs at your passing. All things being equal, you will want to spend these investments first because your heirs will likely be in a higher tax bracket and will pay more on these if they inherit them. Other insurance and investment products, such as guaranteed investment funds, annuities and TFSAs, may not result in taxes for beneficiaries.
MAKING SMART CHOICES
MAKING SMART CHOICES
At the same time, you can choose retirement options that are mutually beneficial to both you and your heirs. Take guaranteed investment funds or annuities, for example. You could pick a single life annuity, but if you do, you will only be able to collect money From it during your life. This option provides the LOWEST monthly payment amount, but there is a catch. If you die before your spouse, he or she could be left with nothing depending on how your annuity is structured. Instead, you could choose a joint and survivor annuity. This type of annuity pays a full benefit during your lifetime and a portion of that benefit to your named survivor after your passing. That percentage is usually 50 or 75 percent, but 100 percent benefit continuity is available. The monthly payment you receive is smaller, but this could be a big benefit to your spouse or long-term partner. Alternatively, you could pick a period certain and life annuity instead. Under this scheme, your annuity would continue to pay out to a surviving spouse or another beneficiary for a limited time, from five to 20 years. This type of annuity pays out less per month than a single life annuity, but it provides a larger monthly payment than the joint and survivor option. It can be a smart option for people who want to make sure their beneficiaries are comfortable after they are gone. If you want the best of both worlds chose a guaranteed investment fund, maximum growth, 100% guarantee, Creditor proof, - Multiple beneficiaries if desired (private transfer of finds) -Bypasses Probate ETC.... contact your advisor for up-to-date information...
At the same time, you can choose retirement options that are mutually beneficial to both you and your heirs. Take guaranteed investment funds or annuities, for example. You could pick a single life annuity, but if you do, you will only be able to collect money From it during your life. This option provides the LOWEST monthly payment amount, but there is a catch. If you die before your spouse, he or she could be left with nothing depending on how your annuity is structured. Instead, you could choose a joint and survivor annuity. This type of annuity pays a full benefit during your lifetime and a portion of that benefit to your named survivor after your passing. That percentage is usually 50 or 75 percent, but 100 percent benefit continuity is available. The monthly payment you receive is smaller, but this could be a big benefit to your spouse or long-term partner. Alternatively, you could pick a period certain and life annuity instead. Under this scheme, your annuity would continue to pay out to a surviving spouse or another beneficiary for a limited time, from five to 20 years. This type of annuity pays out less per month than a single life annuity, but it provides a larger monthly payment than the joint and survivor option. It can be a smart option for people who want to make sure their beneficiaries are comfortable after they are gone. If you want the best of both worlds chose a guaranteed investment fund, maximum growth, 100% guarantee, Creditor proof, - Multiple beneficiaries if desired (private transfer of finds) -Bypasses Probate ETC.... contact your advisor for up-to-date information...
SURVIVOR BENEFITS
SURVIVOR BENEFITS
Survivor benefits are another issue you need consider as you plan for your retirement. These are benefits paid to your spouse or dependants after your passing. There are a few different types, some of which are built into your policy. It is important to understand what type of monetary support your surviving spouse or heirs will have after your passing so you can plan their financial futures appropriately. Here are some of the most common survivor benefits:
Survivor benefits are another issue you need consider as you plan for your retirement. These are benefits paid to your spouse or dependants after your passing. There are a few different types, some of which are built into your policy. It is important to understand what type of monetary support your surviving spouse or heirs will have after your passing so you can plan their financial futures appropriately. Here are some of the most common survivor benefits:
1. Canada Pension This is a big one.
1. Canada Pension This is a big one.
CPP allows widowed spouses and dependants to claim a survivor benefit. Not everyone will be eligible, and the age at which your spouse or children files a claim for survivor benefits changes things too, but the amount can be significant, especially if you were the primary earner. In general, if you filed for Canada Pension at your full retirement age, or FRA, and your surviving spouse waited until he or she reached FRA, your widow/er would receive a little more than 80 percent of your pension benefit While your surviving spouse cannot collect both his or her own pension benefits in addition to your survivor benefits, he or she does have the ability to choose.
CPP allows widowed spouses and dependants to claim a survivor benefit. Not everyone will be eligible, and the age at which your spouse or children files a claim for survivor benefits changes things too, but the amount can be significant, especially if you were the primary earner. In general, if you filed for Canada Pension at your full retirement age, or FRA, and your surviving spouse waited until he or she reached FRA, your widow/er would receive a little more than 80 percent of your pension benefit While your surviving spouse cannot collect both his or her own pension benefits in addition to your survivor benefits, he or she does have the ability to choose.
Also, you can use this to your collective advantage. Let’s say that you are the primary wage earner and you are older than your spouse. Ultimately, it is likely that you will pass before he or she does. As a result, it may be best for your spouse to file for early retirement benefits While the benefit will be less than he or she would receive if retiring at FRA, when you die, your spouse will be able to claim a survivor’s benefit based on your Pension.
Also, you can use this to your collective advantage. Let’s say that you are the primary wage earner and you are older than your spouse. Ultimately, it is likely that you will pass before he or she does. As a result, it may be best for your spouse to file for early retirement benefits While the benefit will be less than he or she would receive if retiring at FRA, when you die, your spouse will be able to claim a survivor’s benefit based on your Pension.
2. Pensions
2. Pensions
Not all pensions are defined benefit pensions. The ones that are give you the option of taking a single life benefit, meaning that the pension pays you every month for the rest of your life (or expected life), or a joint and survivor benefit, which means that your spouse will continue to receive benefits from your pension for the rest of his or her life. You will be able to choose what that percentage is, usually 50 or 75 percent, when you file for your pension. Keep in mind that you will get the most money per month if you choose a single life benefit For instance, if you qualify for $2,000 per month under a single life option, that monthly income could shrink to only $1,600 per month if you choose a joint and survivor option. However, under a 50 percent joint and survivor benefit, your spouse would receive $800 per month after your passing and continue to receive that sum every month for the rest of his or her life, whereas under a single life pension, payments would stop after you die.
Not all pensions are defined benefit pensions. The ones that are give you the option of taking a single life benefit, meaning that the pension pays you every month for the rest of your life (or expected life), or a joint and survivor benefit, which means that your spouse will continue to receive benefits from your pension for the rest of his or her life. You will be able to choose what that percentage is, usually 50 or 75 percent, when you file for your pension. Keep in mind that you will get the most money per month if you choose a single life benefit For instance, if you qualify for $2,000 per month under a single life option, that monthly income could shrink to only $1,600 per month if you choose a joint and survivor option. However, under a 50 percent joint and survivor benefit, your spouse would receive $800 per month after your passing and continue to receive that sum every month for the rest of his or her life, whereas under a single life pension, payments would stop after you die.
3.Annuities
3.Annuities
98% of the time these are a bad idea. even if your roof falls apart or your car blows up, you do not have access to your own money. You gave it away to th company for a monthly small payment. When it comes to survivor benefits, annuities work a lot like pensions. You can opt for purchasing an annuity with a single life benefit or a joint and survivor annuity. Annuities are long term products designed to supplement retirement income. They ARE subject to surrender charges and holding periods. Withdrawals are taxed as ordinary income and, if taken prior to 60. a 10% federal tax penalty. YOU GAVE YOUR MONEY TO THEM, DO NOT EXPECT TO HAVE ACCESS. Guarantees are backed by company issuing product, and several Canadian financial authorities
98% of the time these are a bad idea. even if your roof falls apart or your car blows up, you do not have access to your own money. You gave it away to th company for a monthly small payment. When it comes to survivor benefits, annuities work a lot like pensions. You can opt for purchasing an annuity with a single life benefit or a joint and survivor annuity. Annuities are long term products designed to supplement retirement income. They ARE subject to surrender charges and holding periods. Withdrawals are taxed as ordinary income and, if taken prior to 60. a 10% federal tax penalty. YOU GAVE YOUR MONEY TO THEM, DO NOT EXPECT TO HAVE ACCESS. Guarantees are backed by company issuing product, and several Canadian financial authorities
4. Retirement Income Funds (RIF), (PRIF)
4. Retirement Income Funds (RIF), (PRIF)
Retirement Income Funds also work a lot like pensions, however these allow you to have guarantees of principal investments and growth, they also extend your benefits for a longer period than an annuity does. These are usually put into a Guaranteed Investment Fund, have wonderful guarantees, additional benefits (IE: YOU CAN ACTUALLY ACCESS THE CASH FOR UNEXPECTED EMERGENCIES), as the value of your fund goes up you can lock in a higher amount (balance on your account), this results in more money per month or for a longer period of time. Guarantees are backed by company issuing product, and several Canadian financial authorities.
Retirement Income Funds also work a lot like pensions, however these allow you to have guarantees of principal investments and growth, they also extend your benefits for a longer period than an annuity does. These are usually put into a Guaranteed Investment Fund, have wonderful guarantees, additional benefits (IE: YOU CAN ACTUALLY ACCESS THE CASH FOR UNEXPECTED EMERGENCIES), as the value of your fund goes up you can lock in a higher amount (balance on your account), this results in more money per month or for a longer period of time. Guarantees are backed by company issuing product, and several Canadian financial authorities.
STEP 5: OUTLINE YOUR ASSETS
STEP 5: OUTLINE YOUR ASSETS
The final step in planning for your retirement is to outline your assets. Seeing everything in writing and together can make it easier to determine where your nest egg really stands. Understanding what assets you already have will help you see where you are financially and what steps you need to take in the next few years to make the move into retirement.
The final step in planning for your retirement is to outline your assets. Seeing everything in writing and together can make it easier to determine where your nest egg really stands. Understanding what assets you already have will help you see where you are financially and what steps you need to take in the next few years to make the move into retirement.
INVESTMENTS
INVESTMENTS
First, look at your investments. This includes LIRAs, traditional RRSPs and TFSAs. You will want to total up where they currently stand and make a note of what their most recent returns were like. Consider where the investments stood a few quarters or years ago. While the markets are always shifting, a large investment portfolio needs to be monitored carefully as you approach retirement to avoid sequencing risk. Also, make sure you check with past employers. You may have a retirement account collecting dust (and interest) somewhere.
First, look at your investments. This includes LIRAs, traditional RRSPs and TFSAs. You will want to total up where they currently stand and make a note of what their most recent returns were like. Consider where the investments stood a few quarters or years ago. While the markets are always shifting, a large investment portfolio needs to be monitored carefully as you approach retirement to avoid sequencing risk. Also, make sure you check with past employers. You may have a retirement account collecting dust (and interest) somewhere.
PENSIONS AND LIRAs
PENSIONS AND LIRAs
You should gather information about any pensions and LIRAs you have as well. These may provide half the amount of monthly income for you, so make sure you understand what you have and which options are available. You should also contact the company who handles your pension or LIRA and discuss single life and joint and survivor benefit options. It is important that you know exactly what your monthly income will be so you can make sure you have enough to do all the things you want to do during your retirement.
You should gather information about any pensions and LIRAs you have as well. These may provide half the amount of monthly income for you, so make sure you understand what you have and which options are available. You should also contact the company who handles your pension or LIRA and discuss single life and joint and survivor benefit options. It is important that you know exactly what your monthly income will be so you can make sure you have enough to do all the things you want to do during your retirement.
Canada Pension
Canada Pension
Take a careful look at Canada pension too. Look at what the full retirement age is for someone born the year you were, and consider how much more you could get by waiting beyond that. If you are married, have additional income or otherwise have a way to support yourself, holding out to 71 years old may be the smartest bet. Your benefit amount will increase by 6% year you delay collecting benefits, until age 70.
Take a careful look at Canada pension too. Look at what the full retirement age is for someone born the year you were, and consider how much more you could get by waiting beyond that. If you are married, have additional income or otherwise have a way to support yourself, holding out to 71 years old may be the smartest bet. Your benefit amount will increase by 6% year you delay collecting benefits, until age 70.
DIVIDEND STOCKS
DIVIDEND STOCKS
As you get ready for retirement, you may begin transferring some of your stocks to reduce your investment risk. You may want to consider using a portion of that money to purchase a guaranteed product, such as a fixed annuity, or better yet a guaranteed investment fund, these capture market growth and yet lets you lock-in your profit. These can provide income for you and provide a death benefit to your spouse after your passing. But before you can make that call, you should review your investments with your financial professional.
As you get ready for retirement, you may begin transferring some of your stocks to reduce your investment risk. You may want to consider using a portion of that money to purchase a guaranteed product, such as a fixed annuity, or better yet a guaranteed investment fund, these capture market growth and yet lets you lock-in your profit. These can provide income for you and provide a death benefit to your spouse after your passing. But before you can make that call, you should review your investments with your financial professional.
REAL ESTATE
REAL ESTATE
Your real estate holdings will come into play in planning for retirement as well. For many people, this is their largest asset, and it is one you can leverage to your advantage. Consider what your retirement plan would look like if you sold your home and bought a smaller place or how your expenses might change if you moved to a more rural area or relocated somewhere that doesn’t require driving.
Your real estate holdings will come into play in planning for retirement as well. For many people, this is their largest asset, and it is one you can leverage to your advantage. Consider what your retirement plan would look like if you sold your home and bought a smaller place or how your expenses might change if you moved to a more rural area or relocated somewhere that doesn’t require driving.
CASH VALUE LIFE INSURANCE
CASH VALUE LIFE INSURANCE
Generally a bad product, but if really old enough, often overlooked asset is cash value life insurance. Old policies may have more value in a different format or structure. Also, you may find that you have enough assets now that cashing in or cancelling an old policy will enable you to adopt a more profitable retirement strategy if you no longer need the death benefit for your surviving spouse or children. Take a few moments to gather information about all your assets. You will be looking for any assets you currently hold and evaluating them for how they fit into your retirement plan or strategy. It is possible that you may need to reallocate your portfolio. When you first put money into those areas, you may have had an idea about how those various investments would perform. Unfortunately, our expectations do not always meet with reality. It is possible that you are seeing higher or lower returns than expected in each asset class and each individual investment. This can cause an imbalance in the weight of your portfolio. Monitoring and evaluating your assets regularly will help you spot these issues early so you can make adjustments before they become a problem
Generally a bad product, but if really old enough, often overlooked asset is cash value life insurance. Old policies may have more value in a different format or structure. Also, you may find that you have enough assets now that cashing in or cancelling an old policy will enable you to adopt a more profitable retirement strategy if you no longer need the death benefit for your surviving spouse or children. Take a few moments to gather information about all your assets. You will be looking for any assets you currently hold and evaluating them for how they fit into your retirement plan or strategy. It is possible that you may need to reallocate your portfolio. When you first put money into those areas, you may have had an idea about how those various investments would perform. Unfortunately, our expectations do not always meet with reality. It is possible that you are seeing higher or lower returns than expected in each asset class and each individual investment. This can cause an imbalance in the weight of your portfolio. Monitoring and evaluating your assets regularly will help you spot these issues early so you can make adjustments before they become a problem
Conclusion
Conclusion
Spend some time planning what retirement means for you and how you want to spend your later years. Don’t be afraid to dream big and think outside the box. There are many activities you can enjoy and places you can visit — if you take the time to plan ahead. Make sure you do the work and come up with realistic estimates of what your post-retirement expenses will be. You don’t want to spend the last few decades of your life scrimping or living a reduced quality of life because you didn’t feel like going through your papers.
Spend some time planning what retirement means for you and how you want to spend your later years. Don’t be afraid to dream big and think outside the box. There are many activities you can enjoy and places you can visit — if you take the time to plan ahead. Make sure you do the work and come up with realistic estimates of what your post-retirement expenses will be. You don’t want to spend the last few decades of your life scrimping or living a reduced quality of life because you didn’t feel like going through your papers.
Also, take the time to fully assess your risk. Financial planning is not an exact science, but it can get really close if you acknowledge and allow for risks in your estimates. You need to take all possibilities into account and set aside extra money for your health. If you plan carefully, you can have more than enough to afford to live the life you want.
Also, take the time to fully assess your risk. Financial planning is not an exact science, but it can get really close if you acknowledge and allow for risks in your estimates. You need to take all possibilities into account and set aside extra money for your health. If you plan carefully, you can have more than enough to afford to live the life you want.
You should also be looking at how to structure your finances so that your spouse is well cared for after you are gone and your heirs can enjoy your legacy without a lot of cost or paperwork.
You should also be looking at how to structure your finances so that your spouse is well cared for after you are gone and your heirs can enjoy your legacy without a lot of cost or paperwork.
Lastly, make sure you review your retirement income strategy with a professional. You might also benefit from having someone review the estimates you have made and act as a sounding board for your worries and reservations.
Lastly, make sure you review your retirement income strategy with a professional. You might also benefit from having someone review the estimates you have made and act as a sounding board for your worries and reservations.
Finance professionals know more about available financial products too. Ask and you might find that there’s an option more suitable for your situation than any you have considered to date.
Finance professionals know more about available financial products too. Ask and you might find that there’s an option more suitable for your situation than any you have considered to date.
Your financial future is in your hands. You owe it to yourself and your loved ones to make it wonderful.
Your financial future is in your hands. You owe it to yourself and your loved ones to make it wonderful.
ARE YOU READY?
ARE YOU READY?
Your retirement is your reward for a lifetime of hard work. A little planning can take those years from ordinary to very comfortable. If you have questions about what YOUR retirement could look like, for YOUR unique circumstances, contact our office to book a consultation. We can help you review your options and identify how an Guaranteed Investment or annuity or life insurance can provide you with possibilities.
Your retirement is your reward for a lifetime of hard work. A little planning can take those years from ordinary to very comfortable. If you have questions about what YOUR retirement could look like, for YOUR unique circumstances, contact our office to book a consultation. We can help you review your options and identify how an Guaranteed Investment or annuity or life insurance can provide you with possibilities.
Need more details? Contact us
Need more details? Contact us
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