“Will I have enough??”
A necessary question, and one that is often spoken with ‘fear’. Retirement is something so profoundly unknown that it has people thinking incorrectly when embarking on this final chapter of their lives. What is also astounding is that no matter how much wealth a family accumulates, from both ends of the wealth spectrum, all individuals ask this same question. So, what exactly is cash management?
What is coming in and what is going out? Have your income needs changed? Has something occurred in your life that you have incurred a dramatic change in your expenses? For example, one spouse has become ill and they need to sell their home and move into a retirement centre with $6,000 a month in living costs.
Are you earning enough thru your retirement income plan to be able to have a stable comfortable lifestyle in retirement? Are there a specific cash flow needs we come to expect when were retired? For example, how much travel do you want to fund? How often, while retired, do you wish to purchase a new car or perhaps support a second home in the sunny south?
When creating a retirement income plan, our clients’ budget drives our investment recommendations which are the cornerstone to, “creating tomorrows paycheque today”.
We also employ a strategy to ensure short term income needs, insulate against market volatility or use asset allocation modes to protect clients’ annual income requirements. By making use of cash wedges, money set aside from investing inside daily interest investments, vehicles are set aside for an emergency or income protection needs.
These are the day-to-day issues that require consideration when planning a client’s retirement. A retirement income plan is essential to successfully mapping out a retirement. You usually only get one chance to achieve certain components of a plan and yet, research suggests that the vast majority of Canadians have no formal retirement plan.
For many years I have posed a simple question: while you and your partner are married, and both are working, how many sources of income can the family depend on to pay their bills? They answer, “Two sources.” Now, for the typical Canadian family, how many sources of income must be managed when they are retired? The answer: Eight, on average.
Can you name them?