Good planning is vital to your future: Making investment decisions is essential, and the sooner the better

We are living longer. In fact, statistics are telling us that our retirement will last longer than our carrier. I don’t know what that tells you, but it tells me we can’t sit back and keep putting off the planning for our financial future.

Five common reasons why people haven’t prepared a financial plan:

• You think you do not have sufficient
income or assets to warrant planning.
• You are confused and/or intimidated by
the financial planning process.
• You are afraid of the commitments
inherent in the financial planning process.
• You think that obtaining a financial
planner will be too expensive.
• You resist planning for life’s risks or
potential obstacles getting in your way—
such as a critical illness, disability, or even a
premature death.

Some of us don’t mind leaving our homes with the beds unmade, they are used to fixing it before they get back in to go to bed.
Others can’t leave home until the whole house is perfect. Think of what you will be leaving behind for your loved ones. Planning
ahead doesn’t just provide financial security, it provides comfort in grief.

Structured planning will lead to a secure future. Statistics discovered that two-thirds of Canadians who plan to retire in 2030 may not be saving at the levels required to meet household expenses in retirement.

Today’s retirees can expect to live longer with a much more active lifestyle than previous generations requiring prudent retirement planning. Living longer means that fixed-income products won’t be enough to meet the long-term needs of most retirees.

Your retirement savings need to be protected from inflation and the unexpected expenditures later in retirement. There is a
lot of data out there that suggests that you should match your anticipated monthly expenses with ‘guaranteed’ inflation protected
income products.

For example, if you need $2,000 a month, you should match it with your defined employee benefit pension, old-age security, CPP, and perhaps even an inflation indexed annuity. Once your basic living expenses have been met, other income can come from a structured pool of securities and mutual funds. This type of strategy requires a detailed estate plan and, of course, a well managed investment portfolio.

Every person has their own unique needs, and investments are certainly no exception When would you use a segregated fund over
amutual fund?

A mutual fund is an investment vehicle that is made up of a pool of individual stocks. Mutual funds are operated by money
managers, who invest the fund’s capital and attempt to produce capital gains and income for the fund’s investors.

A segregated fund is a pool of money, invested in stocks, bonds and/or Treasury Bills, held solely for the benefit of the unit
holders of the fund. Inmost cases, the fund cannot be touched by creditors.

Segregated funds are considered to be insurance products sold by insurance companies and, as a result, the governing bodies
and regulations responsible for overseeing segregated funds are usually the same ones that cover insurance companies.
Another fundamental difference between segregated funds and mutual funds is that segregated funds offer a degree of protection
against investment losses.

This differs from mutual funds because, in the unlikely event that all of the underlying stocks that make up a mutual fund
become worthless, investors stand to lose all of their investment.

Segregated funds also have other benefits relating to the death benefit portion of their policies. Beneficiaries of the policy will usually directly receive the greater of the guaranteed death benefit or the market value of the fund holder’s share.With a mutual fund, the market value of the fund represents the value that you will receive.

There are definite advantages to investing in segregated funds. Peace of mind is a big one. Being able to go to bed at night and
knowing that, if the markets around the world crash, your money will still be there. RRSP or TFSA, what is the better option?
This is yet another contradicting investment discussion.

I imagine that many are still unsure of the many benefits of having a Tax Free Savings Account (TFSA). A TFSA is very similar to
that of a Registered Retirement Savings Plan (RRSP), with the TFSA having the added advantage of not being penalized
by making withdrawals.

An RRSP is a tax deferred savings plan for income-earning Canadians. Contributions to this plan are tax deductible and grow tax free until withdrawal. Each withdrawal amount is taxed at the individual’s marginal tax rate. At age 71, you need to transfer the
funds to a Registered Retirement Income Fund (RRIF), purchase a life annuity, and/or cash in your RRSP.

In contrast, a TFSA holder contributes after-tax dollars that grow without tax consequences, and the withdrawals are tax-fee
Canadians have the options of holding both an RRSP and a TFSA at the same time, or may select one or the other as their
retirement savings vehicle.Many advisors suggest that, if your income falls in a lower income tax bracket at retirement, an RRSP may be a better option.

Taking the time to sit down with a financial advisor to review your financial position is the only way to properly determine which retirement investment vehicle is the best option for you.

This will help you protect your investments, and therefore, help you reach your long-term goals.

Long-Term Care Insurance (LTCI) is a new Canadian product. It is a great addition to everyone in their working years. I consider
it a fantastic asset protector.

The inflated costs of long-term care expenses rise every year. According to the Council on Aging of Ottawa, approximately
45% of seniors will, at some point in their remaining years, require long-term care and spend time in a nursing home or long-term
care facility. For a couple over age 65, there is a two-out-of three chance that at least one spouse will enter a facility at some point. In closing, please remember that if your colleague/sibling/neighbour has a particular investment, it doesn’t mean it’s right for you. Each person’s retirement strategy is as unique as their fingerprint.

Most of us tend to plan our vacations more diligently than our future. On that note, don’t forget to buy your out-of province
insurance for your getaways this summer.

Another helpful tip: photocopy two sets of all of your family’s personal documents, including the complete contents of your
wallet and/or purse. Leave one set with a friend or relative and carry the other set in your luggage.

Posted by Robyn Latchman