PETER DOLEZAL: Explore the benefits of a financial plan

An Investment Plan might not be enough to enjoy your retirement years.

Before the days of GPS, if we wanted to drive to Miami or elsewhere, by the shortest possible route, we did not hesitate to meticulously plan the trip, to be sure we achieved this key objective.

Should our retirement planning be any different? Should it be a hit and miss exercise unfolding unpredictably over the years leading to retirement? Or can we, in fact design a “roadmap” leading to our financial comfort and security in retirement?

This essential “roadmap” is a comprehensive Financial Plan. Yet, only some 20 per cent of Canadians have even a rudimentary Plan.

Studies have shown that those with a Financial Plan are far more likely to achieve their retirement objectives than those without. Having specific financial objectives, complete with details of how to achieve them, is far more likely to be successful than simply hoping for a great retirement.

Many of us believe our Investment Plan is our Financial Plan.

It is not.

While an Investment Plan is an important element, it is only one of many. In fact, designing an Investment Plan should be undertaken only after many other elements have meticulously been sorted out — providing a suitable framework for the investment structure. Too often, the “investment cart” is put before the broader “planning horse.”

What are the essential elements of a solid Financial Plan? A typical framework would include:

• Personal financial and related objectives;

• Assumptions upon which the Plan will be built;

• Investment Policy Statement detailing risk tolerance, asset allocation, etc;

• Details of Net Worth (Assets, minus Liabilities);

• Current Cash Flow (Disposable Income, less Expenses);

• Future changes in Cash Flow – for example, at ages 65 and 72;

• Debt liquidation strategy;

• Optimal utilization of RRSP and TFSA eligibilities;

• Real Estate strategies;

• Tax-minimization strategies;

• Life insurance strategies;

• Other personal issues, specific to the individual or couple.

Only after each element has carefully been addressed, honed, and integrated as a building block, can a meaningful Investment Plan be designed, implemented and optimized to one’s specific circumstances.

It is never too late to develop a Financial Plan, even once retired. However, the earlier in life it is created, the more achievable and beneficial the results. A Financial Plan for retirees would focus more on wealth-preservation, rather than wealth-creation.

Developing a sound Financial Plan could be the best-return-on-your-time investment you are likely ever to undertake. An Investment Plan which fails to fully consider all elements of your Financial Plan as its framework, is much less likely to deliver the results you need for a comfortable, financially stress-free retirement.

 

A retired corporate executive, enjoying post-retirement as an independent Financial Consultant (www.dolezalconsultants.ca), Peter Dolezal is the author of three books, including his most recent, The SMART CANADIAN WEALTH-BUILDER.

Just Posted

Everything you need to know before getting the flu shot

Local pharmacist shares concerns, recommendations before flu season hits

Victoria’s Ultimate Toy Fair bounces back into Pearkes

The family-friendly event runs Oct. 19-20 at Pearkes

For Central Saanich couple, fight against MS is a matter of family

Altenkirks sell greeting cards and wooden bowls to raise money for MS Society

Victoria feels the pinch at the pump as gas prices jump 18 cents

Gas up to 157.9 cents per litre at some stations

WATCH: Greater Victoria’s top stories of the day

A round-up of the day’s top stories

POLL: Do you think the day of the federal election should be a statutory holiday?

Increasing voter turnout has long been a goal of officials across the… Continue reading

Potent power play paces Canucks to 5-1 win over Detroit

Miller nets a pair as Vancouver wins third straight

UPDATE: British couple vacationing in Vancouver detained in U.S. after crossing border

CBP claims individuals were denied travel authorization, crossing was deliberate

After losing two baby boys, B.C. parents hope to cut through the taboo of infant death

Oct. 15 is Pregnancy and Infant Loss Awareness Day in B.C.

Cheating husband sues mistress for gifted ring after wife learns about affair

The husband gave his mistress $1,000 to buy herself a ring in December 2017

B.C. massage therapist reprimanded, fined for exposing patients’ breasts

Registered massage therapist admits professional misconduct

B.C. boosts legal aid funding in new payment contract

‘Duty counsel’ service restored in some communities, David Eby says

VIDEO: Bear spies on cyclists riding by on Campbell River street

Riders seem unaware the bruin is mere feet away on the side of the road

Most Read