KAREN ERICKSON, CFP, RRC and KAYLA CARUANA, CFP, BBA, RRC
This week, Denise Young of Tiger’s Eye Advisory Group interviewed Karen Erickson and Kayla Caruana of IG Private Wealth Management. They spoke about how CoVid has impacted the financial industry and what people can start doing now, to plan for retirement.
During Co-vid it may be assumed that people were watching their spending habits. Kayla pointed out that for those who lost jobs, “it increased the awareness and the importance of having an emergency fund. But on the other hand, those who stayed employed took on more debt as a result of the low interest rates”. When it is inexpensive to have debt and everyone is staying home, this resulted in buying trailers and boats, as well as doing major home renovations.
In terms of the market, most investors stayed the course and took advantage of market opportunities. Kayla stated that “during volatile times, people tend to move more into cash and low risk which creates instability in the markets. Unexpectedly the markets had very strong moments over the past 18 months”. This type of information helps those who plan to retire in the next few years prepare for the unexpected, good and bad.
Kayla and Karen speak at local events and seminars focusing on retirement and estate planning. The majority of their clients are retirees or ten years out from retirement. A lot of the time they find women gravitate towards their practice because they are an all female lead team of Certified Financial Planners (CFP). This CFP designation ensures that they act in the best interest of their clients at all times and their practice takes pride in their level of service. Retirees, especially women retirees, appreciate that extra hand holding. “There is already a fundamental shift of wealth from men to women because of life expectancy differences and independent women wanting to take control of their financial life”, says Karen. In their latest seminar they discussed the importance of gearing yourself with the knowledge of where your investments are as a household and ensuring you review regularly especially during changes in the markets.
As the workforce has changed drastically as a result of Covid, the financial planning industry has seen changes as well, specifically in retirement planning. According to Kayla, people are re-evaluating what is important in retirement such as “should I plan to increase savings for travel?” or “should I provide inheritance to my children earlier?”. Another shift was life insurance, intergenerational wealth transfer with tax efficiencies, and disability insurance policies increased as people are more aware as to if “they were to pass, what will happen to their family and their spouse”.
What is the importance of retirement?
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 sixties, you may be considering consulting, an encore career, or additional time to travel or volunteer. If your next chapter 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.
Karen and Kayla provided 5 important goals to help you plan to master retirement and advise you to discuss these goals with your Certified Financial Planner professional.
5 ways to help you plan to master retirement
Longevity – Embrace the unknown Fear that you may outlive your investments is a common anxiety that can be remedied through planning. 58% 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.
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 2% inflation rate could reduce your buying power by up to 40% in just 20 years. Knowing this, you and your IG Consultant 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.
Asset Allocation - Ensure income for life The IG Living Plan you create with your Consultant 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.
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. An IG Living Plan determines which investments you should live on first and how to combine income sources in the most tax-effective and lasting way.
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. Fortunately, your IG Consultant can present a range of options that can put your mind at ease about life’s unknowns while you focus on its possibilities.
 Source: IG Wealth Management survey with 1000 participants, January 2015.
Article Written by Denise Young, WIL National Diversity and Inclusion Advisor and CEO and Consultant of Tiger’s Eye Advisory Group, a people-focused business solutions company that values collaboration and empowerment. She creates collaborative work spaces where “everyone is at the table”. She has a Bachelor of Management and a Masters of Arts in Communication and Technology from University of Alberta.
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