It is important to have a plan when laying the foundation for your retirement plan. There are numerous ways of approaching the matter, but the one constant is that it must be customized as everyone has different needs and wants during their retirement years. Consolidating the best ideas from around the industry resulted in our six-step approach which provides a consistent experience regardless of where you happen to be in your retirement life cycle.
The Following Step Are:
1. Assessing your current life cycle
– Are starting your retirement? Are you caring for grandchildren? Any changes in your health?
2. Establishing your lifestyle and time objectives
– How do you view spending your time? Where will you reside? What role, if any, will work play in your retirement?
3. Determining your financial goals and priorities
– Will you have enough income to do the things you want to do? Do you have enough assets to make your income last? Will you have to move your retirement date further in the future?
4. Layering your income
– Use the least flexible income sources as they are available. Use the least tax-efficient income sources in lower tax brackets. Look for income/asset splitting opportunities.
5. Aligning your investments with your financial plan
– Converting focus from rate of return to risk management. Make sure income producing assets have longevity. Allocate for tax efficiency.
6. Assessing the impact of the plan on your net worth
– Define priorities/objectives for the next 12 months. Reaffirm cash flow needs. Identify any unique expenses anticipated. Rebalance investment portfolio if necessary.
Types of Income
These six steps are created by taking all the various types of income into consideration. It is our expertise that ensures we utilize each source in the most efficient way possible.
– Government Sources (Canadian Pension Plan, Old Age Security)
– Corporate Sources (Employment Income, Pensions, Locked–In Funds, Severance Packages, Deferred Profit Sharing)
– Personal Sources (Registered Retirement Savings Plans, Registered Retirement Income Funds, Tax Free Savings Accounts, Non-Registered Accounts, Home Equity)