How advisors can help solo retirees

Financial planner explains how advisors can give solo retirees financial piece of mind

How advisors can help solo retirees
A new demographic has emerged in Canada – and they are scared of running out of money in retirement.

A recent TD Bank survey revealed that half of Canadians 40 years of age or older believe they are at risk of outliving their savings, while 65% of that age bracket who are currently single, separated, divorced or widowed feel they will most likely be living solo in old age.

According to Shelley Smith, a financial planner at TD Wealth, advisors have a crucial role to play in giving people in this position financial piece of mind.

She said: “Retiring from the workforce has an emotional and financial impact, and there are many considerations that go into the decision to retire. This is why working with a financial planner and saying, ‘ok, what do I need to do today so that I can retire five or 10 years from now? Am I on the right track? What should I be doing?”

Smith said that advisors must find out what type of retirement their clients want and can afford, and emphasise the virtues of some basic, but crucial, saving habits, like the old adage, ‘pay yourself first’.

She said: “Encourage your clients to really sit down and say, let’s look at your retirement your way. If you are solo, establish a plan that gets you closer to your retirement goals. Make sure you are saving, pay yourself first, understand what cash is coming in today and build yourself a budget. Understand what goes into your day-to-day expenses: travel, clothing. What do I need to be putting aside for retirement? Take the reins on this.”

The increase in solo retirees reflects a societal shift where more people are getting divorced and blended families are more common. Smith believes many people – solo or otherwise – put off setting up a retirement plan but says advisors can really stress the importance of a financial roadmap.

She said: “Retiring solo, sometimes that can be by choice and sometimes that can be by circumstance. We see a number of different family types – whether you are a single parent, whether you came from a blended family. I think what is important is thinking about how you are going to retire. This is something people plan for, it’s not something you want to wake up at 65 and think next month I am going to retire, what am I going to do now?”

Shaping the plan to the individual’s needs is also vital, Smith said.

“If I’m 58 and want to retire in the next five years, sit down with a financial planner and really have that discussion to say, how are you defining your retirement lifestyle? What are your sources of retirement income? What type of a plan do you have in place currently in terms of saving? That’s really where your financial planner will build a roadmap for you to make sure you get to your destination and [make] you feel confident that you can. That includes building in a flexibility to that plan in case something happens.”

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