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It's Your Money  

Five retirement goals to discuss with your financial planner

Discuss retirement goals

Retirement is no longer a date on the calendar that marks the end of your career.

If you are one of 2.5 million Canadians now in their 60s, you may be considering part-time work, an encore career or some time off to travel or volunteer.

If retirement is on the horizon, now may be the time to review your plan so you can explore all of life’s possibilities.

Over the course of your life, planning has been your ally. You received advice and built a financial plan that evolved to meet your ever-changing needs.

Now, your plan will continue to adapt and grow with you, as you set new goals in retirement like managing your income, planning for expenses and maintaining a healthy lifestyle.

Here are five important retirement goals to discuss with your financial planning professional:

1. Longevity – Embrace the unknown

Fear that you may outlive your investments is a common anxiety that can be remedied through planning. About 58 per cent of Canadians worry about making their retirement funds last. You’ve never retired before so don’t expect that you can anticipate what life will be like. You may want to stay in the workforce, consider an ‘encore career’ in your current field, or try something entirely new.

Whatever you decide, having a comprehensive financial plan can reduce the anxiety of the unknown and give you visibility of your complete financial picture so you can be assured your income in retirement compliments your lifestyle and the goals you’ve set for your family.

2. Inflation – Plan ahead to meet your goals

A retirement plan needs to provide you with a predictable income that accounts for rising costs due to inflation. A two per cent inflation rate could reduce your buying power by up to 40 per cent in just 20 years. Knowing this, you and your advisor can plan ahead and find the best way to combat rising costs and still pay for all of your short- and long-term goals such as building your dream home, traveling, lending support to family members, and maintaining your involvement in the community.

3. Asset allocation - Ensure income for life

The financial plan you create determines the ideal combination of asset types in your investment portfolio based on your age, your goals, and your tolerance for risk. Your asset allocation will typically include equity and fixed-income investments along with some portion in cash. Because investment results are dynamic, it’s necessary to rebalance your holdings regularly to keep the allocation in line with your goals.

Clients who work with professional advisors often choose portfolio solutions that automatically adjust such factors as asset classes, geographies, sectors, and investment styles to mitigate risk.

4. Withdrawal rate and minimizing risk and taxes

The amount of income tax you pay in retirement depends on your withdrawal rate, meaning how much you take out, and also the type of income you earn. For example, dividend income and capital gains are not taxed the same way as income from your registered investment accounts. A proper financial plan determines which investments you should live on first and how to combine income sources in the most tax-effective and lasting way.

5. Health - Planning to stay healthy

Regular exercise and a healthy diet are things you can plan for. If there are costs associated with gym memberships, club dues, training, and equipment, you can build them into your plan. Other things are not so easy to anticipate, such as illness, renovations that let you stay in your home, or the need for long-term care. Your plan should look at a range of options that can put your mind at ease about life’s unknowns while you focus on its possibilities.

Take the first step today. Whatever vision you have for retirement, now is the time to ensure that you’ve considered all of your options.

Create a plan based on your new goals while always knowing it will continue to adapt and change with you in this exciting and rewarding next chapter of your life.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.



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About the Author

Brett Millard is vice-president and a member of the executive leadership team at FP Canada, the national professional body for the financial planning industry. A not-for-profit organization, FP Canada works in the public interest to foster better financial health for all Canadians by leading the advancement of professional financial planning in Canada. 

He has worked in the financial advice industry for more than 15 years and is designated as a chartered investment manager (CIM) and is a certified financial planner (CFP).

He has written a weekly financial planning column since 2012 and provides his readers with easy to understand explanations of the complex financial challenges they face in every stage of life. Enhancing the financial literacy of Canadian consumers is a top priority for Brett and his ongoing efforts as a finance writer focus on that initiative. 

Please let Brett know if you have any topics you’d like him to cover in future columns ,or if you’d like a referral to a qualified CFP professional in your area, by emailing him at [email protected].

 



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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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