By Julie Fitz-Gerald
“Part of retirement planning includes risk planning as well, ensuring you have adequate insurance in place so that your family is looked after if anything happens to you.”
Retirement planning. Don’t let these two words scare you. While the thought of determining pensions, government benefits, retirement age and lifestyle goals send some people running in the opposite direction, it doesn’t have to be a head-spinning experience. The trick is to use an expert who can help you to build a solid, secure plan for your future.
Whether you’re fresh out of the academy or a veteran of fire service, it’s never too early to start planning. Jamie Golombek, managing director of tax and estate planning at CIBC, recommends using a financial advisor to assist with your plan. “I wouldn’t try to fight a fire on my own and I wouldn’t expect you to try to plan your retirement on your own,” he says.
Do’s and Don’ts
Do ask colleagues and friends for recommendations about which financial advisors they use. Interview at least three advisors to see who is the best fit. Which one understands your target planning best and will put together a good plan for you? That’s the advisor to partner with.
Don’t focus exclusively on investments with a high rate of return. Do you want to travel, have a vacation property or retire early? For firefighters, health issues or injuries can often force an early retirement, which means your pension has to stretch for a longer period of time. “Imagine what your retirement’s going to look like and get ahead of it. What is that magic number that you’ll need to provide you with an annual income that you can live comfortably on? It’s only when you sit down and do this stuff on paper with hard numbers and best estimates that you can determine that number. That’s really where an advisor comes in,” Golombek explains.
Do get the full picture.Maybe your stance on saving for retirement is “Who cares?” After all, you’ll be getting a decent pension that should do the trick —maybe. Is this a good plan? You won’t know how viable this route is until you sit down with a financial advisor and look at your pension statements, available government supports specific to your province or state, debt repayment and approximate taxes to be paid. “In some cases, a pension may be enough. And, in some cases not. It depends on the lifestyle. Some people’s spending goes down to nothing because they’re not commuting anymore, they don’t need work clothes, they no longer need a second car, while others want to see the world, travel and go on cruises, so their expenses increase,” he notes.
Don’t forget about insurance. While pensions and government benefits offer a base level of income, Golombek says a vital area of planning that often gets overlooked is insurance. “Particularly for firefighters, the risk the profession has with injury and early death means that looking at disability insurance and life insurance policies is very important. Part of retirement planning includes risk planning as well, ensuring you have adequate insurance in place so that your family is looked after if anything happens to you.”
With the Do’s and Don’ts laid out, here are Golombek’s top strategies to help get you on the path to your dream retirement:
- Envision. Picture what your retirement will look like. What does it involve? Where do you want to live? What type of lifestyle do you want to have? Get a good frame of what it looks like.
- Gather income. Put together all your sources of retirement income, including an accurate estimate of what your pension will pay out based on your retirement age. Calculate government benefits specific to your area and look at all sources of savings you’ve accumulated.
- Add-up debt. Look at your expenses. Will your home be fully paid off or will you have a mortgage payment? Account for second properties, credit card debt, loans and student debt — all of these affect cashflow management in terms of expenses.
- Get advice. You’re not expected to do this on your own. Get a written retirement plan that takes into account your goals, lifestyle during retirement, expenses and pension projections. An advisor will help you to determine how you’re going to get there in terms of what you need to do today. Calculate how much you should set aside and what rates of return you can expect based on the level of risk that’s right for you. Individual advice is critical.
With some forward-thinking, retirement will look good on you!
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