Canadian Nurse

https://infirmiere-canadienne.com/blogs/ic-contenu/2016/11/08/ce-quil-faut-savoir-sur-la-planification-de-la-ret

Canadian Nurse asked CNA affinity partner TD Insurance Meloche Monnex to put us in touch with a financial planning expert who could explain what people need to consider when planning for retirement. Here are thoughts and advice from Jo Ann Parisien, senior financial planner at TD Wealth Financial Planning.

Nov 08, 2016

According to Statistics Canada, Canadians’ life expectancy was 79 years for men and 84 years for women in 2010-2012, which means 15 to 20 years of retirement living after age 65 or more if people retire earlier. How much money do people really need to save for those years?

Transitioning into retirement is an exciting milestone, but it can also be an emotional and sometimes challenging time. To enjoy retirement the way you’ve envisioned, it is important to define your personal and financial goals for this life stage. There is no one specific amount that any one person should have saved; your specific total will vary based on your personal retirement goals. It will depend on the type of retirement you want to have, so an important first step is to think about how you want to spend your golden years. For example, someone who wants to travel or buy a big-ticket item in retirement will need to save more than someone who prefers to stay close to home or participate in less expensive hobbies. This reflecting will help you and your financial planner assess how much money you will need per year during your retirement.

The value of your home would be factored into your total net worth, and the actual value would depend on whether you plan to stay in your home, relocate or possibly downsize. The value of your home would depend on a variety of factors, such as location, size and age of the property, so it would be a good idea to do a valuation of how much it’s worth, if you plan to include it in your overall financial plan for retirement.

The key to effective retirement planning is to work with a financial planner to identify and prioritize your retirement goals and then develop a customized plan to help achieve your retirement dreams.

With people living longer, what has changed in the thinking around how conservative retirement income funds should be?

With Canadians living longer, it is more important than ever to plan ahead. Consider all forms of income you may receive at retirement and develop a plan to fill any gaps along the way. For example, while the holdings in a registered retirement income fund are usually more conservative in nature than those in registered retirement savings plans, it’s also important to make sure you are keeping up with inflation, particularly given the low interest rates we’re seeing in recent years. Clients are already looking for alternative options when they meet with me. For example, dividend-paying investments often offer better growth. Work with a financial planner who can help you navigate the best way to diversify your investment portfolio, looking for opportunities to manage potential risk while still helping to grow your savings.

How do you choose the right financial planner?

An effective way to choose a planner is to ask questions and gain a better understanding of how he or she works. For example, what kind of experience and credentials do they have? What is their area of focus and what types of clients do they work with? It is also helpful to discuss the services they provide and even request a sample financial plan to review. In addition, you may want to consider someone who has the certified financial planner (CFP) designation and keeps up to date with their knowledge through continued education.

Here are a few tips to help you choose whom to work with:

• Find a planner who’s a good listener and who wants to understand you as a person rather than just a balance sheet.
• Make sure the planner helps you identify short- and long-term goals.
• Ask for an assessment of what it will take to achieve these goals.
• Insist on a personalized plan to help meet specific needs instead of a one-size-fits-all solution.
• Choose a planner who has the tools to review the progress of your financial plan against your personal goals rather than just focusing on investment returns.
• Look for someone with whom you feel comfortable.

What do people need to do to prepare for a meeting with a financial planner?

Before you meet with a financial planner, it is important to get yourself organized. As I’ve mentioned, think through your personal goals — short, medium and long term — and what matters to you and your family.

In terms of logistics, you will want to bring a list of all income, assets and expenses to your first meeting to share with the planner as you work together on building a financial plan. First, think of all the income you receive each month and bring a copy of the summaries. For example, it’s helpful to bring along a recent pay stub and, if you have a rental property, a receipt for the last month’s rent. Providing these items will help paint an accurate picture of the income you receive each month. When it comes to assets, think about anything you own — property, vehicles, mutual funds, bank accounts and anything else that you would consider as part of your overall net worth. These assets, coupled with your ongoing income, will be factored into your financial plan. And your financial plan would not be complete without thinking about your expenses or liabilities — what you spend every month and what you plan on spending in your retirement years. Come prepared to talk about these items. You may even want to bring a list so you don’t forget anything, whether it’s groceries, utilities and insurance premiums or clothes and entertainment.

Last but not least, remember to bring along an open mind and an appetite for a good conversation —the relationship you have with your financial planner is an important one that will help shape your financial future and achieve your personal goals.

With nearly half of Canadians living pay cheque to pay cheque, what advice do you have to help people save for retirement?

I’m very big on budgets and on knowing how much you spend and where your money goes. A good rule is to pay yourself first and put a portion of your income into your retirement savings or an emergency fund. I recommend at least 10 per cent of your income, but if that’s not doable, you can start with less and increase your contributions as your income grows over time.

For Canadians who may find themselves living pay cheque to pay cheque, saving may be difficult. Look for ways to cut costs where you can and put those extra dollars into savings. Whether it’s $20 or $200 a month, when it comes to starting to save for your future, they key is to actually start.

Also, if your work offers a group pension plan or retirement savings plan matching program, participate as soon as you’re eligible. After all, why would you want to leave money you’re entitled to on the table rather than putting it in your pocket?

All these individual steps will add up over time and contribute toward your overall retirement savings.

Because of workplace injuries, some nurses will need to retire sooner than they expected. What advice do you have for them?

The best time to plan for the unexpected is before the unexpected happens. Preparing for unforeseen or unplanned scenarios requires planning and saving; regardless of your age, it’s never too early to start.

No one wants to imagine being ill or injured, but it’s important to think about what this would look like if it happened to you or your family and how you would cope. For example, having a three- to six-month emergency fund in place to cover expenses can help ease these worries, if they arise. And when it comes to quantity, no amount is too small to put away. Making regular contributions to a tax-free savings account or setting up an automated transfer each month will add up in the long term and help manage costs associated with unexpected events.

If you don’t have backup funds set aside, look for ways you can liquidate funds or free up cash flow to help cover additional costs that arise if you find yourself on a leave from work or taking early retirement. You should also speak to your human resources department to determine what type of coverage is available, such as short- or long-term disability. Once you know this information, a financial planner can help you assess your financial options and determine the best course of action should an unexpected injury arise.

What investment products are available that can be useful?

Once you know your goals and the timeframe in which you have to achieve them, it’s important to do your research and understand the benefits of the various investment products available to you and how you can use them to achieve your objectives. It’s also important to be aware of your risk tolerance — are you comfortable with taking on more risk if it means the possibility of bigger returns, or do you prefer a more conservative approach? Once you understand the type of investor you are, you can shift your attention to specific products and offerings. There’s no one-size-fits-all when it comes to investment products or models so it’s important you speak with your financial planner to determine what options are available and will work best for your specific goals.

The markets are forever changing and so are the opportunities available to Canadians. Whether it’s the desire to retire early, travel more frequently or simply spend time with family and friends, the key is planning ahead. With a diverse selection of products available to help meet the varying needs of investors, it’s important to ensure that you understand what is right for you. While financial plans can have similarities, each one should be tailored to the individual’s specific needs and circumstances.