Helping clients with their retirement plan

One basic question is often overlooked by Canadians when it comes to retirement

Helping clients with their retirement plan
When it comes to retirement plans, Canadians often overlook the very basic question: How much do I need?

Financial planner Ed Rempel said this is one of the barriers keeping Canadians from achieving the financial freedom they need. He also highlighted the reluctance or clients to invest in the stock market and the absence of retirement strategies appropriate to their lifestyles.

For advisors, the challenge is making sure clients follow the most important steps necessary to creating a retirement plan, Rempel said.

The first of these steps is establishing the kind of lifestyle their client desires during retirement. Rempel noted that advisors have to ask their clients things related to debt, travel plans, and other lifestyle choices that may affect their costs.

After setting clear parameters, retirement plans must find ways to minimize taxes and optimize pensions, Rempel said. He explained that this depends on effective investing that balances risk with long-term rates of return. Additionally, he suggested that a well-balanced portfolio with an emphasis on equities is the key to a good plan.

Rempel said the Smith Manoeuvre investment strategy can help Canadians in their retirement plans. The strategy enables homeowners to borrow the equity in their home to invest over time. The mortgage is then replaced by a tax-deductible credit line from the borrowed money as it declines. With this, the interest can be capitalised and the interest tax deductions give tax refunds. This allows homeowners to pay down the mortgage more quickly.

"Borrowing to invest, through an investment strategy like the Smith Manoeuvre, may present an opportunity for investors who have a long-term investment horizon and are comfortable with a certain amount of risk," Rempel said.

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