Now is good: every stage in your life is the right time for retirement planning
While it’s always best to start early with retirement planning, the door never closes on making sound saving and investment decisions.
“It’s something I never tire of telling people,” says Jeff Bartja, vice president, asset management at Scotiabank. “People at every stage of life have options for retirement planning. It’s just that the best tools for them to achieve their retirement goals change along with their circumstances.”
For example, while people in the earlier stages of their financial life may have modest incomes and higher debt, they have the benefit of a longer time horizon before retirement.
“It’s important for them to put some savings aside now, because they have the incredible potential of compound interest over the long term,” says Bartja. “Interest accumulates on interest and can nicely build a healthy retirement fund over time.”
Further along the time scale are people in their middle age and beyond. They also possess unique advantages that can be leveraged for retirement.
“They probably have higher incomes and less debt,” says Bartja. “They’re in their prime earning years so they have the advantages of income and financial resources, which need to be leveraged against the disadvantage of less available time before retirement.”
There’s also a third group that doesn’t always attract the same level of attention from financial advisors: people who are already retired or semi-retired.
“We don’t talk enough about this group,” Bartja says. “They’ve reached their retirement years and they have a nest egg, but they need to manage those funds through different phases of retirement. As Canadians live longer, their income also has to last longer, and they should account for the possibility of assisted living as well. They need to think about drawing cash flow from their assets in the right way.”
Whatever your life stage, saving for retirement isn’t a matter of following a plan that’s carved in stone, but rather making sure the income will be there so you can live the retirement lifestyle you plan for yourself.
“My wife and I are empty nesters and we sold our house and moved into a condo,” says Bartja. “We later realized that we were happier in a house with a yard, so we readjusted our retirement plans around that lifestyle decision.”
Bartja is a big advocate for seeking the assistance of a financial advisor who can help assess the cost of a person’s retirement goals, and map out a savings and investing pathway to provide the level of income that can help get them there.
But seeing a financial advisor can be a long time coming for some people. Retirement may seem like a long way away, so they delay the appointment. They’re intimidated by financial tables and charts. They might worry that they don’t have a large lump sum to bring to the retirement table, or feel that their situation is too complex to provide a clear road map. Or they may simply believe they’re too late to start planning. Bartja notes, however, that nearly half of Canadians don’t begin retirement planning until they reach age 40 or more, according to a 2016 poll for the Ontario Securities Commission.
“But every day delayed is a day lost, and retirement will become a bigger issue if it’s ignored,” he says. “You can book an appointment with a Scotiabank advisor in a bank branch or have a mobile investment specialist come to you. Our advisors are passionate about building a tailored solution that respects your retirement dreams, financial situation, timeline to retirement and tolerance for investment risk and market volatility. Each situation can benefit from a different mix of asset classes, from cash equivalent investments to fixed income to equities.”
Booking an appointment with a Scotiabank advisor doesn’t oblige anyone to commit to an investment strategy. Customers often say that the meeting improves their financial literacy and provides them with a sense of purpose and clarity regarding their future.
Bartja recommends that people review their financial plan every year and to account for changes in their lives — marriage, divorce, the birth of a child, a change of career, a work bonus, an inheritance — or simply for peace of mind.
“I never sleep better than the day I get my annual physical and get a clean bill of health,” says Bartja. “My second-best sleep occurs on the day I review my financial plan.”