Saving For Retirement . . .

an approach that works!

Saving for retirement is not easy.  It requires a plan and some discipline.  Maybe a lot of discipline.  The “Fall” of 2008 has taught us a lot.  Here we saw old financial institutions disappear.  World stock markets hit bottom.  Entire investment portfolios were devastated and retirement dreams were wiped out.

Recently we have been following the advice given by David Trahair, CA, author of the national bestseller Smoke and Mirrors: Financial Myths That Will Ruin Your Retirement Dreams and his latest book, Enough Bull.  We are now convinced there really is no need to gamble with your hard-earned money and retirement plans.  To a large extent what we offer up here is the advice offered by Mr. Trahair.

Time for a new game plan?  Then this has to be your #1 rule.  Avoid personal financial disasters.

• Never touch anything that cannot be explained simply to you in plain English.
• Don’t invest in anything that is not guaranteed by the government.
• Never borrow to invest.
• Avoid complicated investment schemes.  If it sounds too good to be true, it is.

Make this part of your new plan.  Buy a home and pay off the mortgage.

• Decide if you can afford a house and, if you can, buy one.
• If you can’t afford a house today, then start investing in a Tax-Free Savings Account.  This is better that the RRSP Home Buyer’s Plan.
• Do the calculation of how many years it will take to pay off the mortgage and do it.
• Never risk your home for any kind of investment idea, no matter what.

Next, reduce your expenses. By the way, this doesn’t have to be painful.

• Focus on two of your biggest expenses – income taxes and interest on your debt.
• Pay to have your family’s personal income tax returns prepared by a qualified expert.
• Pay extra to have that expert analyze your family situation to maximize savings by income splitting, restructuring to make sure as much debt as possible is tax-deductible.
• Find out what your credit rating is and improve it.
• Get at least three quotes on any debt that you get into.

Once you have paid off your home and have reduced your expenses you are now ready to turbo-charge your RRSP.  If your plan is on target you are probably now somewhere in your early 50’s.  And yes, there is still lots of time left to generate a healthy retirement income.

Know the difference between Mutual and Segregated Funds.  Choose the asset mix that best suits your temperament and personality.  Don’t get caught up with all of the hype behind Canadian or foreign equities.  Look for the safety of GICs, government bonds and low-fee bond funds.  At Gary White Insurance we recommend segregated funds because at death and maturity, premiums minus withdrawals are guaranteed, between 75% and 100%.

When planning for retirement you should also be familiar with the ins and outs of the Canada Pension Plan.  We will help you answer these questions:

• What is the CPP and how much will I get?
• Does it include anything other than pension?
• How do I apply for it?
• When can I apply for it?  Is there an advantage to applying early?

Stay away from Universal Life Insurance policies.  They are a disaster waiting to happen.  Let us repeat Rule #1.  If it sounds too good to be true, it is.

While you are making plans for retirement you had better make plans for a Critical Illness and the need for Long Term Care.  According to the Heart & Stroke Foundation of Ontario and The Canadian Cancer Society with odds like these you’d be crazy not to:

• 1 in 2 heart attack victims are under the age of 65
• 1 in 3 stroke victims are under age 65
• 1 in 3 will develop some form of life threatening cancer

But you don’t have to use up your retirement funds to pay for the added costs brought on by an untimely heart attack, stroke or cancer diagnosis.  LifeBeat which is underwritten by the AXA Life Insurance Company combines both Critical Illness and Long Term Care into one policy.  This may be the absolute best living benefit product in the insurance industry today.

Our approach to saving for retirement is a conservative one.  Our clients who experienced the “Fall” of 2008 are happy for that.

Like we said at the very beginning, saving for retirement is not easy.  It requires a plan and some discipline.  If you are looking for a new plan and some help with that discipline, please contact us at:

Gary White Insurance

Tel: (800) 433-5307 Bus. Cell: (416) 768-4279
Email: info@garywhiteinsurance.com