Retirement income planning
Retirement is a significant milestone that requires careful planning. The multitude of considerations can be overwhelming. We will design a tailored plan to assist you in taking the necessary steps towards a more comfortable retirement.
Everyone’s vision of retirement differs, from world travel to quality time with loved ones or pursuing new hobbies. Retirement offers abundant choices compared to the structured working life, but it can also be complex, particularly for those just starting to plan. This generation faces unique challenges due to increased financial complexity, necessitating meticulous planning for a fulfilling retirement. These challenges encompass heightened portfolio volatility, inflation, supporting dependents, and longer lifespans. Retirement planning extends beyond finances; recent studies highlight the emphasis on a healthy lifestyle. By partnering with an advisor, you can ensure your financial goals are achieved, allowing you to invest your time and attention in what truly matters.
Benefits
As your financial needs change, so should your wealth plan. We help clients
understand their overall wealth position from the development stage to their retirement.
At every stage of your financial journey, we tailor your wealth plan to meet changing needs. Our comprehensive approach covers retirement income strategies and sustainable wealth transfer to future generations. The plan encompasses estate distribution, including contingencies for incapacity, addressing your current and future needs and the welfare of your beneficiaries. Estate planning factors in your personal preferences, charitable contributions, special gifts, the establishment of trusts if necessary, and ensures effective estate allocations among loved ones while considering tax implications. Our focus is to protect your dependents, family members, and loved ones, aligning your financial and personal circumstances for a secure future.
Asset Allocation
Diversifying your portfolio across various asset classes is crucial. However, the weighting of each asset class is equally important. Imbalanced exposure can lead to unexpected volatility and impact long-term portfolio returns. Common asset classes include equities, fixed income, cash, and alternative assets. Careful consideration of their allocation is key to achieving optimal portfolio performance over time. Equity investments offer growth potential by leveraging the profits of owned companies. When profitability rises, you benefit from price appreciation and dividends. Yet, during periods of low profitability, there is a risk of significant losses.
Asset Location
Optimizing tax efficiency through asset location is vital for constructing an efficient portfolio. By strategically allocating securities to tax-deferred and taxable accounts, investors can minimize their tax liability and lower overall costs. However, it is crucial to implement this strategy alongside a well-designed asset allocation plan.
Tax-efficient RRSP/RRIF depletion
A significant impact on your retirement income can result from a large RSP/RRIF. For instance, if your RRSP is valued at one million dollars, converting it to a RRIF requires a mandatory minimum withdrawal of 5.28%* (or $52,800 in 2022), which increases with age. When combined with other income sources like government and employer pensions, as well as investment returns, this withdrawal may trigger OAS claw backs. Upon death, the entire value of the RRIF is added to the individual’s income for the year, potentially subjecting it to significant taxes. It’s crucial to be aware of these implications since a substantial portion of the RRIF may be eroded by taxes.
Risk Management
Implementing effective risk management strategies entails maintaining a minimum allocation to fixed income in the portfolio. However, the percentage varies depending on factors like an investor’s risk profile, investment expertise, and cash flow requirements. Regular rebalancing of the allocation between government and corporate bonds, bond maturities, durations, and issuers is necessary to adapt to market changes. This fixed income component serves as a safety net and a strategic measure to counteract volatility in equity markets.