Plan For the Retirement You Want



By iA Private Wealth, August 17, 2021

Just as everyone takes a different path to retirement, what you do when you retire is also unique to your own circumstances, needs and wishes. It’s helpful to think about how you envision the future, since your chosen retirement lifestyle will significantly impact your finances. Obviously, travelling the world in luxury requires more money than a simpler lifestyle.

What counts the most is matching your financial assets with your retirement lifestyle to ensure you can accomplish your objectives. Keep in mind that retirement is often measured in decades, not in years. As people live longer, it becomes more critical to plan well for retirement.

Identifying your retirement expectations

Before you start building your retirement plan, here are five overarching questions to consider that may help you gain a better sense of how your life could look in retirement:

1. What lifestyle do you prefer?
In some respects, being retired is an opportunity to choose your own adventure. With more time and flexibility than you’ve probably had in years, retirement allows you to do what you enjoy and find meaningful.

Many retirees pursue a mix of travel, hobbies, time with family and friends, volunteering, exercising and staying healthy, gaining new knowledge or skills, and simply enjoying unscheduled leisure time (reading, listening to music, watching favourite shows, etc.).

The activities you choose and how much effort you devote to them depends on your personal interests, mental and physical capabilities, and financial circumstances. Think about the approximate costs of these activities as you construct your retirement plan and budget.

2. Where do you expect to live?
This question not only covers where you’ll live geographically, but also takes into consideration whether you plan on downsizing to a smaller home (e.g., condo or apartment), stay with family members or reside in a seniors-oriented community or retirement home.

Retirees often prefer to remain at home, but consider if that’s financially practical and whether you can manage the responsibilities of independent living. You might try a phased approach where you stay at home for as long as it makes sense, and later consider alternatives to receive the support and services you need.

3. Will you still work?
It’s becoming common for people of “traditional” retirement age to continue working. If you like what you do and can remain proficient at it, why not? Work is valuable because it keeps you busy, engages your mind, sharpens your social skills and lets you be productive. In addition to a sense of accomplishment and intellectual satisfaction, working also generates income that can help you enjoy a better retirement.

Maybe you can work part-time hours or start a business that matches your skills and interests. It might be a full-fledged business or a “side hustle” where you work according to your availability.

4. Will you be financially prepared for health issues?
Getting older often means experiencing health challenges. You can take practical steps – such as regular exercise, eating properly, getting enough sleep and having emotional support – to help minimize health issues. You should also budget in your retirement plan for expenses like medications, therapeutic services, mobility-related home renovations, professional health care support, living in a nursing home, etc. You may also wish to explore insurance policies that can provide the coverage you need as you age.

5. What are your legacy plans?
Giving back is important for many retirees, as it’s their way to make a meaningful difference in the world. Maybe you want to donate to your favourite charities and/or volunteer your time to those causes. You can also establish a charitable trust, scholarship or bursary, or even a foundation that creates your legacy as you see fit (and as your finances allow). An Investment Advisor has the knowledge to build a tax-efficient giving plan that can maximize the impact of your financial support.

At iA Private Wealth, we can help you plan for and achieve the retirement lifestyle you want. Reach out to one of our Investment Advisors today.

This article is a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.

Related insights

Navigating market cycles


By iA Private Wealth, October 25, 2022 If you invest in stocks, either directly or through mutual funds and ETFs, you know the market never rises steadily without periods of decline along the way. That’s how the “market cycle” works, and the better you understand the inevitability of this cycle, the more you can succeed as an investor. What’s a market cycle? Over a period of time and based on prevailing economic conditions (among other factors), markets go through distinct phases. The four main phases are accumulation, mark-up, distribution and decline. Accumulation. This phase typically arises from a period of severe market decline. Stock valuations tend to be attractive after falling from higher levels, but it takes courage to invest in this phase as the “wounds” from a sharp decline are still fresh and it’s not yet clear the market has “turned the corner.” Mark-up. In this phase, some time has passed, upward trends are being established and investors are generally convinced the market has bottomed. More people begin jumping back into the market amid wider optimism for future gains. Distribution. Markets are rising in this phase and early buyers begin capturing their gains by selling to latecomers who waited for clear signals confirming the market’s upswing. Amid high stock prices, the market also experiences a growing number of valuation “pullbacks” as overenthusiastic investors have bid some stocks too high relative to their value. Decline. This phase starts to bring the market full circle, as an “overbought” market is filled with stocks that are ripe for a sharp decline. Some overconfident (or simply greedy) investors linger in this phase longer than they should, assuming that falling stock prices will quickly rebound. Investors and the market cycle Given these different phases, how should people invest? It helps to acknowledge that the duration of each phase will vary, but generally market analysts can only define and “time-stamp” phases after the fact, once data has been studied. Accordingly, it makes sense for most long-term investors to avoid trying to time the market. Yes, stock markets tend to follow patterns. It’s tempting to think you’ve identified the end of a “decline” phase and should start buying stocks again. However, market timing usually isn’t a successful long-term strategy because it’s virtually impossible to predict how markets will fare over a particular time period. Understanding bulls and bears Markets are prone to rise and fall – that’s just the way they react to macroeconomic and geopolitical circumstances. When the market rises 20% above its recent low levels, it’s commonly referred to as a “bull market.” When the market declines 20% below recent high levels, it’s known as a “bear market.” Although both market types are inevitable, historically the long-term trend has been to move higher. In fact, according to data from Bloomberg as at December 31, 2021, the average bull market lasts about 78 months and generates an average return of 193% over that period. Meanwhile, the duration of the average bear market is only about 11 months, and the average return is -32%. Armed with this knowledge, most long-term investors are best served by recognizing stock market cyclicality but not jumping in and out. If your timing isn’t perfect – and that’s a safe assumption unless you own a crystal ball – you risk selling when stock prices are still rising, and buying when stocks are declining. Either way, you could be creating “permanent loss of capital” that will interfere with achieving your long-term financial goals. Benefits of staying the course It requires discipline to remain invested through the down phases of a market cycle, just like it does to resist the temptation to be greedy when you think stocks have nowhere to go but upwards. However, sticking to your investment strategy is a proven way to build long-term wealth. An Investment Advisor can help you stay true to your wealth plan and keep emotions out of investing. A good advisor has the skill and experience needed to guide you through the market cycle so you can ignore short-term “noise” and focus on the future with confidence. We can provide the sound financial advice you and your family need under any market condition, so contact us today.
Intergenerational Wealth and the Need for a Family Advisor


By iA Private Wealth, October 7, 2022 In today’s increasingly complex market and economic environment, the steady hand of an experienced advisor can make all the difference in reaching your financial goals. Working with an Investment Advisor can result in comprehensive, personalized wealth planning for every stage of life, giving you greater control over your finances and peace of mind as you approach the future with more confidence. But not all advisors are created equal. So where do you start? Thankfully the answer doesn’t require you to search too far. An advisor that has built a trusted relationship with your family members is uniquely positioned to understand your values and ensure a smooth transfer of wealth when the time comes. Share the benefits of advice A positive aspect of intergenerational wealth planning is the “multiplier effect” it may have as you extend the benefits to other family members, such as children and perhaps grandchildren. Integrated advice is valuable because it considers your family’s complete financial circumstances, taking into account how one part of the financial equation may impact others. In fact, there are many benefits to having one advisory team look after an extended family’s finances. For the younger generation, access to highly sophisticated wealth management services from a trusted advisor is not always an option due to high minimums. But most advisors will waive these requirements for family members of their clients. And when the time comes for the eventual transfer of wealth, the same values that have helped your parents and grandparents build and sustain their financial legacy will continue to prevail for the next generation. A long-term, multi-generational wealth plan is designed to grow and preserve family wealth. An ideal way to achieve this outcome is to engage the services of a trusted advisory team that can establish a 360-degree view of your family’s financial goals, opportunities, challenges, values and other unique circumstances. Holistic planning is like solving a puzzle as your advisory team figures out how certain financial variables fit together. The team can also become familiar with each family member individually and understand family dynamics to help build consensus and avoid undue conflict. After all, money is a sensitive topic that may elicit strong emotional responses capable of disrupting family harmony. Proper planning and good communication can lead to a smooth, tax-efficient intergenerational transfer of your wealth whenever the time comes. Keep in mind that children (and potentially grandchildren) who choose the family’s advisor to manage their wealth will hold separate accounts from their parents and/or grandparents; this allows these children to benefit from a wealth plan designed just for them. Need an advisor for your family? If you don’t have an advisor, the search can be overwhelming. Start by focusing on advisors who work near you and your family. This provides convenient access to discuss issues in person, although it’s becoming popular to conduct meetings over the phone or by video call. Sometimes, however, it’s valuable and reassuring to have a face-to-face chat with your advisor. During your search, inquire about the advisor’s industry experience, educational history, financial designations and certifications, and how they are compensated. If they work with a team, ask about each member’s background and roles, as well as when you might expect to interact with them in the advisory process. While any advisor can be skilled and knowledgeable, you want a good personality fit so your family feels comfortable working with them. If possible, choose an advisor who’s known and trusted by you or another family member. This can help ensure your family is well advised for many years to come. We can provide the holistic financial advice you and your family need, so contact us today.
What Snowbirds Should Know Before Heading South


By iA Private Wealth, October 6, 2022 Many Canadians learn to tolerate or even embrace winter, but those who hate the cold and snow may wish to explore the “snowbird” option. Snowbirds are Canadian seniors and retirees who spend significant time (several weeks or months) in a southern U.S. state like Florida or Arizona. While basking in warmer weather can be appealing, it also raises challenges for Canadians living temporarily in the U.S. U.S. income taxes Depending on your time spent in the U.S., you might be considered a U.S. resident for tax purposes, which means filing a U.S. tax return to report your worldwide income (in addition to a Canadian return). You can avoid being deemed a U.S. resident if you satisfy one of the following: Substantial Presence Test. It requires you to spend less than 31 days in the U.S. in the current calendar year and less than 183 days (on a weighted basis) during the three-year period over the current and two preceding calendar years. Closer Connection Exemption. In the current calendar year, you must spend less than 183 days in the U.S., be able to establish a home in Canada and prove that you have a closer connection to Canada than the U.S. Canada - U.S. Tax Treaty. If you spend 183+ days in the U.S. during the current calendar year, you may file a U.S. non-resident tax return and try to claim an exemption under the Canada - U.S. Tax Treaty by completing certain U.S. Internal Revenue Service forms. You can learn more about these options by reading this article from Snowbird Advisor. Rental scams Unless you purchase property in the U.S. – which brings its own tax-related complications – you’ll need to rent. But beware of scammers. They’ll advertise a great rental property at an amazing price, often well below market rates. Once you’re hooked, they may demand a wire transfer for a substantial deposit or even the cost of the entire rental period. When they receive your transfer, you’ll likely never hear from them again. You can avoid rental scams by doing your homework to ensure you’re dealing with people who can legally rent out the property. Consider properties from legitimate rental websites or reputable real estate brokers/property managers. If someone claims to own the property or is an agent for the owner, insist they verify their identity and provide credible references. Conduct an online search for properties that sound interesting to ensure they exist and are actual rental units. Ask friends who’ve rented in your desired area to recommend properties. To avoid nasty surprises, sign a formal agreement that covers all rental terms and conditions. Travel insurance Qualifying snowbirds have access to insurance policies designed to address their specific needs. Which policy is right for you will depend on factors such as how long you’ll spend in the U.S. or how many trips you’ve planned in a given year. Snowbird insurance helps cover the cost of accidents, health issues and other emergencies. The cost of U.S. medical care can be exorbitant and may shock those accustomed to Canada’s universal health care system. While provincial health insurance may cover some U.S. medical costs, coverage is limited and you’ll need additional insurance. To get the coverage you require, it’s best to purchase a snowbird policy from a reputable insurance provider before leaving Canada. Your vehicle If you have a reliable vehicle and both the desire and ability to drive to the U.S., you can bring your vehicle across the border with few issues. Just know that keeping your vehicle there for more than one year may lead to import taxes or duties. Also, provided you didn’t make any value-enhancing modifications to your vehicle while in the U.S., taxes or duties won’t apply when returning to Canada. Another popular option for snowbirds is to fly to their destination and rent a vehicle during their stay, or buy a vehicle in the U.S. and keep it there year-round. Investigate ahead of time so you know what rules and stipulations may apply. We can help create a wealth plan that accommodates the snowbird lifestyle, so contact us today.
Investing in Inflationary Times


By iA Private Wealth, August 26, 2022 If you’re shocked by rising interest rates, it’s understandable. For developed-economy countries like Canada, interest rates have been very low – sometimes at historic lows – for decades. Recently, the Bank of Canada (BoC) has been among the central banks raising rates aggressively, with more increases expected. Why? In a word, inflation. Inflation means rising prices for goods and services. Since it occurs when the economy is growing, some inflation is good. If inflation soars well above target – the BoC prefers inflation around 2% annually, but Canada’s inflation rate hit 8.1% in June – then buying power decreases drastically. Central banks raise interest rates to help control surging inflation by cooling off consumer demand. Impact of high rates on investors Investing is a proven way to build wealth over the long term, but under these trying conditions of high inflation and rising interest rates, how are investors affected? When rates are low, the overall economy runs smoothly. People are more willing to spend when they know that borrowing costs (e.g., mortgages, credit cards, loans) are reasonable, so demand grows for many goods and services. In turn, companies tend to be more profitable and the markets perform well as stock and bond prices rise. The reverse happens when inflation is high. As interest rates rise, corporate earnings and stock prices tend to fall. The bond market may decline since bond prices usually move in the opposite direction of interest rates. So, where can you find attractive opportunities when rates are high? Here are seven possibilities: Big bank stocks. Banks can generate more profit as the spread increases between the interest they must pay to lenders and the interest they can charge borrowers. When market rates are low, there’s less ability to widen spreads. Energy stocks. Historically, high inflation means soaring energy prices, and the current environment is no exception. Investors with a healthy allocation to Canada’s energy sector heading into 2022 have seen a handsome return year to date1, even with the recent dip in oil prices. Price-maker stocks. Some companies have the ability to pass higher costs of production on to the consumer without any meaningful reduction in sales and profitability. Many such companies will be found in the consumer staples sector. Floating rate securities. As the name implies, the yield on these securities will move up or down in tandem with rising or falling interest rates. Real return bonds. Issued by the government, these bonds are pegged to the Consumer Price Index (CPI), which tracks the inflation rate of key goods and services. Real return bonds are designed to help protect investors against inflation since they pay interest based on the CPI. Savings products. Guaranteed Investment Certificates and high-interest savings accounts are two popular products to help savers earn more income. Their rates of interest are linked to general market rates, so when inflation pushes interest rates higher, savers benefit. Annuities. Issued by insurance companies, annuities pay out a fixed stream of income to individuals, sometimes for the life of the annuity holder. They are generally long-term products designed to generate steady retirement cash flow. If you purchase an annuity when interest rates are high, you can receive higher cash flow than with annuities bought when rates are low. Investing is difficult at the best of times, but an environment of high inflation and rising interest rates adds complexity. When markets are volatile, staying focused on your financial plan and long-term goals can help you through the challenges – and remember, inflation will eventually subside and market conditions will improve again. We can help you invest for the long term under a wide range of economic and market conditions.      Contact us today.
Protect Your Finances by Naming a Trusted Contact


By iA Private Wealth, August 22, 2022 When it comes to finances, most people can make their own decisions. They may seek support and guidance from an Investment Advisor, of course, but they’re able to take the advice they’re given and make sound decisions for themselves. But what happens if you lose mental capacity? Wouldn’t it be reassuring to know that someone will step in and protect your financial interests? That’s where a trusted contact comes into play. Designating a trusted contact Canada’s securities regulators understand the risks of incapacity, so they’ve introduced the Trusted Contact Person (TCP) standard. A TCP is someone you authorize your advisor to contact if they believe you may be experiencing physical or mental incapacity, or if they suspect you’re a victim of fraud or another form of financial exploitation, including undue financial pressure exerted by a loved one. Your designated TCP should have good knowledge of your overall personal and financial circumstances. A family member, close friend or caregiver are common choices for a TCP, but you could turn to a trusted lawyer or accountant to uphold your best interests in the event of your incapacity. Whomever you choose, be sure to notify them and confirm that they know what the responsibility involves and that they’re willing to accept this important role. What does a TCP do? Let’s say your advisor suspects you may be experiencing a cognitive decline or demonstrating signs of dementia. You could be making uncharacteristic financial decisions or taking on more risk than usual. Or maybe a fraudster has taken control of your email and is sending unusual requests to your advisor, such as asking to sell certain investments and transfer money to an external account. In cases like these, your advisor will reach out to your designated TCP and ask them if they’ve noticed anything unusual about your recent behaviour or actions. The TCP will respond to the best of their knowledge and may follow up with you to confirm their opinions. Unlike someone with power of attorney, a TCP cannot make financial or health care decisions on your behalf and holds no trading authority over any of your investment accounts. They won’t even have access to your accounts. The primary role of a TCP is to protect your best interests. Who needs a TCP? Having a TCP is a best practice, and everyone should consider adding this layer of protection to their investment accounts. However, since seniors tend to be more vulnerable to financial abuse, adding a TCP to their accounts should be a top priority. A TCP is also useful if you travel a lot and may not be easily accessible by your advisor. If your advisor cannot reach you and there’s a crucial, time-sensitive financial matter requiring your immediate attention, the advisor may ask your TCP to provide your contact information. Confidentiality remains paramount in the advisor-client relationship, so your advisor will only disclose information the TCP needs to know under the circumstances. Similarly, your TCP is only obligated to vouch for your current health or state of mind as it pertains to your financial situation, or provide your contact details to the advisor on an as-needed basis. A TCP is important to protecting your best interests and ensuring the integrity of your financial circumstances. Naming a TCP can provide you with peace of mind and gives you and your family an added measure of protection and reassurance when it’s needed most. For more information on how a TCP can help safeguard your finances, contact us today.