Identifying expectations can help map out suitable investments based on goals rather than just risk tolerance
What do you want out of your retirement?
Being on the verge of retirement, Russell and Terri Bruce are taking this question seriously. Of course, their family is the biggest priority but visits cost money for travel and other expenses.
The questions of what you want out of retirement and how you intend to pay for it are the most important that financial planners ask clients. Many clients say enjoying time with family and travelling are the top priorities.
People are retiring with a finite amount of resources and the wish list is often longer than the assets list — things like helping the kids buy a house, leaving something for the grandchildren’s education, holidaying in Cuba, or even just sprucing up the cottage at the lake.
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“I’m always about trying to get clients to flush out what their goals are, get clear on it, and then we can map out suitable investments based on goals, not just risk tolerance or what investments look flashy or sexy,” says Chris Veilleux with Prairie Wealth Planning Consultants Ltd. out of Brandon.
Related stories in this issue:
- Retirement planning must start now
- Income can continue after retirement
- Get a handle on expense and income streams
- Call a financial planner before retirement
No matter the goals, he advises his clients not to underestimate the cost of their dreams.
“Historically, I’ve seen where people start to travel more and they start to do more and those things cost money. They’re going sometimes on multiple trips a year, whereas they haven’t done that for many years so sometimes those things get undervalued.”
If someone is going to go golfing once a week, they need to know what that is going to cost them in the long run and look realistically at how this cost will impact their long-term financial plans, he says.
Veilleux says he will discuss people’s long-time dreams and how he can help them fit those dreams into their lifestyle.
While some farmers need to avoid spending 10 years living in debt because they have spent their money too fast, other retiring farmers, need to avoid the opposite scenario.
Veilleux usually gives his clients options for things like donations to charities and setting money aside for children and grandchildren early in the planning process. Once that has been figured out, it is freeing for clients. They can go do things for themselves knowing they have looked after other important matters.
“I’ve seen cases where people are pulling back because they want to leave something for their kids. Why not leave something specific for them that you can have set up and funded so that you can actually spend your retirement savings on your retirement?”
Retirement goals are where Colin Sabourin, a financial planner with Hemmett Anseeuw and Associates in Winnipeg, starts with his clients. When he is helping clients save money, he recommends his clients live off fixed expenses, such as their property taxes and utility bills, while the variable expenses are the money that the clients have fun with.
Setting up what retirement goals the client wants to do with this money is an important discussion, he says.
Sabourin also needs to understand what the farmer is looking for so he can direct them. Deciding the proper amount of investments and income needed so variable and fixed expenses fit the client’s needs are part of the overall plan, he says.
Few clients need $5,000 a month to fund their dream lifestyle, says Sabourin, but some goals come with a hefty price tag. The dream needs to balance with reality, but there is hope for a successful retirement when there are steady income streams and investment possibilities to take into account.
Everyone has a different idea of what their dreams look like but everyone can look at their finances and see what can be done.
The best advice is to start early and seek professional help.
The author would like to thank the Canadian Association of Farm Advisors for its assistance with finding financial advisers to discuss these issues. These articles should not be taken as tax or legal advice, and readers should consult with their financial professionals before implementing any of the approaches discussed.
