Category: Blog

Retirement Savings Late Starter?

Harry and Sally both earned high incomes and liked to live the good life. They leased higher end European cars, took two-week exotic vacations almost every year, and lived in a house much larger than they truly needed. To accomplish this lifestyle, they put off retirement savings. Now in their forties, Harry and Sally are realizing they have some catching up to do. Listed below are a few things to consider:

Delay no more – Procrastination or bad breaks may have derailed a savings plan. Now is the time to make savings a priority.

Pay off the house – Avoiding mortgage payments in retirement can dramatically reduce Harry and Sally’s living expenses. They could even consider downsizing the house now and free up more cash for savings. If they still have a mortgage payment as they approach their chosen retirement age, it would be good to have payments end at the same time they retire. This can be made possible by making additional principal payments each month or a lump sum yearly.

Plan to work longer – Putting off retirement a few years can have a dramatic effect on retirement savings. For each additional year worked, Harry and Sally gain an extra year of savings and delay one more year of having to live off those savings. By working part-time or seasonally for a while in retirement, Harry and Sally can reduce the amount they need to draw from their savings. This can give their money a chance to grow some more.

Take Canada Pension Plan (CPP) early and save it – CPP retirement benefits can be taken as early as age 60 or delayed until as late as age 70. If Harry and Sally take their benefits early and save them, it makes for larger savings that could be paid out on early death. These additional payments may be lost if income from CPP is postponed.

Avoid investing too aggressively – Those waiting too long to start saving for retirement may be more prone to ‘gamble’ with their savings on speculative investments. This approach is more likely to result in big losses.

Avoid investing too conservatively – Some late starters may be inclined to save their money in cash or money market type investment vehicles. The problem with this strategy is that their modest savings will be ravaged more by inflation over time.

By making a few adjustments now, Harry and Sally may be able to avoid the shock of a forced lifestyle change when they retire.

Business Risk Planning

Imagine the following scenario for a moment. You and your partner have opened a business, and are feeling extremely confident about your current success. Your primary competition across the street cannot keep up after one of their co-owners passes away, eventually closing down. Their entire customer base eventually comes your way, and business has never been better. This might be a positive scenario strictly as far as your business is concerned, but a wise businessman or woman should be thinking one thing at a time like this—what if our positions were reversed? What if one of our business leaders should pass away, how will the other find the capital to keep the business afloat?

The time to plan for the worst when it comes to your business is always before the worst occurs. If one of the primary driving forces behind your business should pass away, you will need cash to keep the business afloat and continue to provide for your family and employees. Here are some options and obligations you might be facing should you find yourself in this situation:

Borrow money from a bank. This is likely not an enviable option. Most businesses already owe significant loan debt to banks, and increasing that load will increase the level of stress and demand on a business to generate revenues. A significant bank loan can cost the surviving business leader thousands per month, costs that must be made up for with increased sales.

Pay the deceased’s widow and family. Many businesses heavily involve the families of the principle business leaders. That involvement may not simply vanish after someone passes away. Meanwhile, the family of the deceased will need to be provided for and may wish to remain heavily involved in the decision-making process.

Involve the deceased’s family even further in the business. While family can provide a talented pool from which to draw, this might not be a viable option. Widows and family members might not have the necessary skills, time or desire to get the work done. Family cannot be relied on to fill the gap in worktime and expertise should someone involved heavily in the business pass away.

Look for a buyer. This should be considered a last resort. Your business is still yours, and the idea of selling it simply to survive carries with it a great deal of compromise. Potential buyers will be aware of the recent loss of leadership, decreasing the perceived value of your business. They also will likely not have your level of personal investment in the business or your best interests in mind when purchasing.


To avoid stressful situations like the ones discussed above, invest in life insurance to ensure that the business can survive and thrive after the unexpected death for you and your business partner. Funds from a life insurance policy can cover the living expenses for the widow, pay bank debts, and pay for new employees or management to fill the gap and keep the company afloat until a full recovery is on the horizon.

The Advice Dilemma

A constant dilemma for Advisors working with clients to help them realize their goals and dreams is striking a balance between the tyranny of immediate current events with the need to stay focused on your longer term goals.

The recent Brexit vote in the U.k. is a case in point. The media created a firestorm of hysteria, speculation and anxiety with its constant and overwhelming coverage of the impending vote and its aftermath.

The reality is that the vote was more of a political event than an economic one. The impact on the markets was short-lived and did not present much of an investment opportunity except to those traders such as hedge funds and so on who made bets on the expected outcome of the vote. The full extent of the impact of this vote will be unknown for many years as the negotiations to exit the Eurozone by the U.K. will take many twists and turns. These events are a testament to the desire of the average person in the U.K. to have a say in how they are governed and taxed by authorities in Brussels, who are not accountable to the local populace. In fact, this is the same reason the U.S. fought for its independence over 200 hundred years ago.

Brexit is just the most recent event that has been hyped by the media, with another one being the market correction at the beginning of this year, another event that was not based in the economic fundamentals at that time.

The challenge for advisors is to what extent do they respond to and address current events, thereby appearing informed and offering reassurance versus doing and saying little and reminding clients of their longer terms savings and investment plans. The answer to this question will vary by advisor and by client. It is also difficult to add anything new to what is already being mentioned in the popular press. Some additional information can be gleaned from industry conference calls and commentary from economists that may be helpful or reassuring to some clients.

However, if an advisor was going to choose between an immediate commentary and saying little, the balance of the decision may likely come down to saying or doing very little other than perhaps taking advantage of some investment buying opportunities that may become available due to any emotional reactions to the event.

Why? Mostly because the media, society in general and our political system is designed to create fear, emotional upset and panic amongst the populace, which is very good for business.

Yet, you have a job to do that must rise above the noise of the maddening crowd! You must continually be focused on making a living, having a comfortable lifestyle, spending less than your net income and saving the rest for long-term asset building and lifestyle risk management, or what the industry commonly refers to as financial planning.

The hardest job of all is to keep focused on your personal situation and on how you can progressively improve it over time. That is what a good advisor is for, to remind you of the things you need to do to fulfill your own stated hopes and dreams.

No one likes change but change is constant. The hardest task of all is for clients to recognize how they must align their behaviour and actions with their long term goals while ignoring the constant barrage of news that tries to take make them emotional and take their focus off of their long term picture.

Call our office today for a review of your personal situation to see how things can be improved!