From The Desk of Brian Walker: The Hardest Part of Retirement

rrsp-eggThe moment you retire you are expected never work again.

Think about that for a minute. Every dollar you’ve ever EARNED has been EARNT. Your bank accounts will never be replenished again from your toil. All of your income from here on will be the result of your Canada Pension and OAS, any private pensions you are a part of and your savings. This is your life and your future boiled down to a number.

And as most companies stopped defined benefit pensions, many Canadians have had to turn (usually out of necessity) to investing in the market to grow and fund their retirement.

I have yet to retire, although I admit to being closer to it now than I was 20 years ago when I started this business, and I have to acknowledge that I find the prospect of retiring frightening. Work has occupied most of my life, and while I enjoy travelling and have a number of hobbies I have developed over the years I wonder if they can fill my days. But the thing that always sits at the back of my mind is about the money.

Because regardless of how well you have done in life there is always the potential to lose money in the markets, but so long as you are working you can replenish some of those losses. Once you have retired however, that’s all there is. A financial loss can be permanent in retirement and its impact will last the rest of you life, defining all your future decisions.

photoFor my currently retired and retiring clients the thing that has surprised me the most is that while these concerns are very present, they sit alongside a concern that should really be receding: market growth. For all the worry about protecting their retirement nest egg from severe downturns and unforeseen financial disasters, many investors are still thinking like they are accumulating wealth and have twenty years until they retire.

When it comes to investing, retirees need to be looking at investments that fit the bill of dependability and repeatability. Dividend paying stocks, balanced income funds and certain guaranteed products offer exactly that type of solution, kicking out regular, consistent income that you can rely on regardless of the market conditions. And as more and more Canadians head towards retirement we are seeing a growing base of useful products that fit these needs beyond the limited yield of GICs and Annuities.

The downside of these products is that they are all but certain to be constrained when it comes to growth. They simply will never grow at the rates of some companies, certain investments or aggressive markets by design. That’s a good thing, but nearly a quarter of a century of investing have instilled in many Canadians a Pavlovian response to the idea that investing must equal growth. But investors will be much better served by looking past desire for an ever expanding portfolio and towards investments that secure their long term income.

I’m not suggesting that once you retire you stop participating in the market, or that having any growth in your portfolio is wrong, or that it represents some kind of fault in your retirement planning. What is at stake though is controlling and protecting your savings and lifestyle by making your investment portfolio subservient to those needs over growth focused market participation. Your retirement could last almost as long as your entire working life, and easily as long as the amount of time you saved for your retirement. There will be plenty of things to worry about in retirement, and lots of other financial needs that must be addressed; from comprehensive estate planning to out-of-pocket health care costs. Why complicate your retirement needs by worrying about whether your are participating fully in bull markets, or worse, bear markets?

 

If you would like to discuss how we can help your retirement needs, or how we can re-tune an account for retirement please send us a note!

From the Desk of Brian Walker – The New Year is a Time for Reflecting on the Past

photo

This Christmas will likely be remembered by many of us as the holiday that nearly wasn’t. While many found themselves without power, including Adrian, I was lucky and relatively unaffected. But seeing so many of my friend’s and family’s Christmas plans so greatly disrupted caused me to think on better years. It seemed appropriate that the theme of the Queens message this Christmas was “Reflection and Contemplation”, and after listening to the Queens speech I spent some time reflecting on my life and came to the conclusion that I have much to be thankful for and owe many for that good fortune.

It was exactly 21 years ago to the day that Damaris and I walked into the offices of The Financial Planning Group on Bloor Street to start my new career in financial services. After twenty three wonderful years at Wardair, several more years as a private consultant to major corporations, having owned a significant percentage of a major tour company and started two airlines, I knew it was time for another long term career. It took time to realise that I needed a role away from “travel” and it was friends and my lovely wife who convinced me to bring my skills to the burgeoning financial service industry.

Perhaps the most rewarding aspect of what we have accomplished since January of 1994 is that we still have many clients with us today who signed on with us that first year. To those clients and the many that have joined us since, I would like to extend an enormous “thank you” for your business, your understanding, and your support during both good and bad times. For example, I was amazed that while I was reaching out to our investors during the 2008 market meltdown how many of our clients who called to see if we were OK! Our clients rallied around us in 2010 when I had my heart attack and subsequent bypass surgery. And then in 2012 when Damaris passed, the outpour of grief and messages of love and support by those of you who had known her was unbelievable.

I am leaving for my winter holiday this week and I have asked Adrian and his family to join us in Barbados for a few days. We would not normally be both away at the same time but this is a special trip. Adrian has secured permission for us to take Damaris’s ashes to the island to be scattered. Barbados was a very special place for Damaris who I think visited annually since the early 1960’s and she and Adrian spent nearly six very happy months on the island when he was a baby while I flew down most weekends. Adrian was just nine months old on his first visit and he and Shraddha are thrilled to be taking little Sophie on her first visit at eleven months, hopefully one of many.  Kimber, freshly returned from her sun vacation will be in the office and Adrian will be setting up a “virtual office” so business can carry on as usual.

In February we will be reminding all clients who need to make RRSP contributions for 2013 to do so but if you would like to get this chore out of the way you can do so with an electronic transfer to your B2B account or simply mail us a cheque.

In summary thank you again and my very best wishes for 2014.

Sincerely,

Brian Walker  

From the Desk of Brian Walker – In Retirement Go Small

ImageFor many people approaching retirement, there may be mixed feelings about their house. Perhaps not their house, but their home. Homes are where important things happen for families and for many soon-to-be retiring couples there is sometimes some question about whether you should sell your home, or keep it in retirement.

While you may have lots of fond memories about your home however (and while your children may never forgive you for turning their room into a train model city) selling your family home in retirement can be liberating, financially and personally. Downsizing in retirement can represent an exciting new phase of your life, providing you with more leisure time, additional funds for travel and a considerable reduction in the amount of manual household chores.

I speak from experience, having recently moved from a country home of nearly 4,000 square feet and three acres of grounds to a modest 1000 sq ft condo in downtown Toronto. But deciding to make the move was difficult. I knew the benefits of parting with my home, the extra money I would have and the lack of physical work, etc. But I also recognized that I would also have to part with many things I had acquired in my life. In the end what finally drove my decision was the realization that caring for my home was now more a burden than a joy.

In most cases you will never be as healthy, or as in good shape as we are today. Retirement is no longer about spending your remaining years in your slippers. I have a bucket list of things I’d like to do, trips I’d like to take and a granddaughter I enjoy playing with. Your retirement should be about what you want, and while the decision to downsize our houses and change our lifestyles can be difficult, we shouldn’t be squandering our active years shackled to our homes.

It took me a year to make up my mind that it was time to downsize. Ultimately a pro and con list really helped crystallize my choice. There was lots of work to do, lots of emotion and stress associated with the move, but after six months in my new home I know I made the right decision.