It's that time of year when the snow starts to fly and you want to make sure you have enough retirement income to live. Figuring out the right combination of savings and income requires some planning, something Stuart McConnachie knows a good deal about.
Stuart McConnachie is a financial advisor for the Whistler branch of Edward Jones.
Today, Edward Jones has approximately 700 Canadian branches and continues to grow. This year the firm has been ranked highest in investor satisfaction among full-service investment firms in Canada.
Planning is the key element for your retirement, McConnachie confirmed, and a portion of that may come from reliable sources like pension plans, government benefits, annuities and perhaps part-time employment. After that, you may be counting on your personal retirement savings.
From his experience, McConnachie found that most people will need to withdraw some money from their portfolio, so it's important to make sure you have the right mix of investments to generate sufficient income and growth.
You might want to consider consolidating your accounts. Doing this can help you gain a clearer picture of your retirement savings, and the withdrawal amounts that may be needed from both your registered and non-registered accounts.
Deciding an appropriate amount to withdraw from your portfolio can depend on several factors including your age, risk tolerance, how your money is invested and your desire to leave a legacy. Everyone’s situation is different, McConnachie added.
It's not uncommon today that a retirement can last 20 years or more so an initial withdrawal rate of four per cent can be a good place to start. Starting with a moderate withdrawal rate, McConnachie continued, allows you to be more flexible because your income needs may rise and fall.
Next, review the makeup of your portfolio and where your income is coming from. Guaranteed Investment Certificates (GICs) and individual bonds can help provide a predictable flow of income. Some people decide to invest only in GICs because they provide income with less risk. However, McConnachie explained GICs alone likely won’t provide a return that can keep pace with inflation.
When looking for stocks and mutual funds, McConnachie suggested that you should search for ones with a history of paying dividends and increasing them over time. Keep in mind that dividends can be increased, decreased or totally eliminated at any point without notice.
Although equities possess more risk relative to bonds, their growth potential can help protect against inflation. To help reduce risk, he recommends clients consider buying quality that you can hold for the long term.
Don’t overlook the importance of diversifying your investments, reminded McConnachie. While diversification does not guarantee a profit or protect against loss, it has proven over time to be an effective investment strategy.
Another option he suggested is that some of your retirement income could be from life annuities and products like Guaranteed Minimum Withdrawal Benefit (GMWB) plans. By entrusting your money to an insurance company, you exchange the funds for a guaranteed income stream that will last your lifetime and pay for your necessary living expenses. These options can be customized to meet your personal retirement needs.
To begin the process, gather all your financial information together and contact your Financial Advisor about creating a long-term strategy that can help meet your needs today and into the future.
Did you know?
Whistler Community Services Society (WCSS) is hosting a Wellness Speaker Series with topics including financial wellness and family law. For more information on these upcoming events contact WCSS at 604-932-0113 or register online at www.eventbrite.ca.
Maria Schwarz (MA, BScN) is a freelance writer with a focus on senior issues and aging well. Currently she is a contributing writer to Silver Linings.