Retirement Planning Guide for Canadians

Sometime in the last five years, there's been a major event that's happened in your life. Transmission went on a car, a newborn that showed up in your life, a grandchild was born, maybe a family member passed away prematurely, or there was a sickness that happened that impacted, you know, or maybe there was a market correction, you lost a bunch of money on an investment. These are categorical things that happen for people, all kinds of people along the road of life. And they, we don't know when they're going to happen.

Hey, it's Richard Canfield here with Ascended Financial and the Wealth Without Bay street podcast. Quick Video. We want to talk a little bit about retirement planning for Canadians. So we're going to walk over a couple of key steps, five key steps that you need to be thinking about when it comes to retirement planning. You could think of it as a bit of a guide for Canadians. And we're going to walk through a couple of these key things. So the first one step one is to get clear on time. Time. Time is one of the most fundamental factors that we need to consider when you're thinking about planning for your retirement, planning for a stage when passive income is going to be coming in because we're going to stop active income. The idea of around the societal version of retirement is that you're no longer working at your quote unquote career or job or business, and now you're going to be operating with some kind of a passive income source. So whether that's from a, you know, pension Canada pension plan, old age security, living off of investments that you have, rental real estate income, dividend income from a stock portfolio, and on and on and on with these different ideas. The intent is that you're no longer working actively and you're drawing from passive income sources. Now we do encourage people to work as long as they can because if you're passionate about something, there's no reason to stop doing it. But some point in time, you're going to want to at least have the option to be able to stop that work. So first thing you want to know is how much time do you have from today until the day that that retirement date or that passive income date, you want that to kick in, you need to know that variable. Now you might be off on that target. Maybe it's a couple years early, maybe it's a couple years after, but at least if you have a reasonable target set, you can now do proper planning. Is it 10 years from now? Is it 15 years from now? Is it 20 years from now? Or is it 5 years from now? Wherever you're at in that timeline, if it's smaller time or a longer time frame will determine what do you need to do today to meet that objective. Now there's a second period of time that we really need to be looking at. That second period of time is the passive income date, start date, the retirement date, and then the date of graduation. When do you think that you're reasonably not going to be, you know, taking air into your lungs on planet Earth anymore? You know, when's your final day here? Well, when you know these two numbers, you, you won't know what they actually are. But if you're planning for it, you want to be able to plan for consist and longevity of income. And if we don't have a target, it's pretty hard to plan around it if you don't have a target. So on that note, it's really important to identify that there's a lot of people beginning to live past age 100 these days. Over 600,000 people worldwide are now centurions and that trend is rising. Now, according to Wikipedia, only about 12,000 of those in 2020 are in Canada. But that's a growing trend and with the advances of medical technology, we are seeing more and more of that beginning to happen. So it's very important now the more years that you plan on living, the longer, the more longevity, the longer you plan on being around for the more income, you're going to need to support that. So very important to recognize what those times are and just be mindful that medical, again, advances are happening all the time, every year. And so it's pushing out and progressing the longevity of humanity, human life on a regular basis. Now step two is to get real, get real about your future expenses. What do you need to make your ends meet? So think about the basics. You know, food, water, shelter, like things that you need to live. Let's, let's itemize those, then you can start getting into some of the other categories. So housing, what are your housing costs going to be? Like, what are they presently and will they be lower or higher moving forward? Maybe you'll have your home paid for, but there's going to be, is there any renovations? Is there, is there property taxes? You know, you still got to put, you know, get heat coming into the property, etc. So you need to have shelter as a basic need. What is that going to cost you? Food. You got to put food in your belly. What is that going to be? What's that going to cost you? Things like vehicle expenses or your mobility. How do you plan on getting around? Now the trend is moving towards things like autonomous vehicles. Maybe there will be a vehicle service where you pay 300 bucks a month and a car just zips over and picks you up where you're at and it takes you to where you want to go. But for right now, you're familiar with what you do presently. Consider what those costs are going to be as you look for as you age into retirement. Recognize that we need a plan for that number. And then you can start adding in other things such as your health insurance or health costs as you begin to age. Often, you know, things like supplements and vitamins and all the other kind of medications you may take, well will also likely increase. So there could be additional costs that are, that are there. When you're no longer working actively in a business or for someone else's business, you may not have a group benefit plan that covers many of those things. So that's an extra cost and a target that a lot of people don't plan very effectively for. So another thing would be hobbies. What is it you're passionate about or that, what's the thing that gives you joy, that fulfills you and are you going to want to do a lot more of that probably when you're at a retirement stage? So what are the costs associated with that hobby if it's a, is it a really expensive one or is it, you know, like knitting where you have, you know, minimal supply? So just be mindful of what that will be and start to plan accordingly for those things. Because if that's what's going to produce joy and fulfillment for you, you want to make sure that becomes, you know, a non negotiable in your retirement planning objectives. Okay, now if we know what our start or you know, when we're starting from and when the day of like retirement is now we also have to figure in some inflation over that period of time. So make sure that you always identify with, you know, planning for what that dollar will be that you'll need to fund when the time actually comes. And of course that will likely increase as you move later on into those retirement years. So step three is to invest in yourself and invest in your own education. Obviously you're going to want to be looking at investing and saving money in other types of vehicles, financial vehicles. Bot how will you know what the right one for you is unless you get educated about that? So the, the first thing to really be investing in is yourself and your skill set and Your knowledge. The more you work on this thing right here, the more opportunities show up for you and the more you can get laser beamed on a niche. Maybe it's a business that you're going to start. Maybe it's you want to become a real estate investor. Maybe you want to, you know, learn to how to do stock option trading, whatever that thing is. That's something you want to get some specialized knowledge on, get some mentorship, get some coaching so that you can really amplify that and get, get very clear and specific. It allows you to spot opportunities in a much clearer way so that you can become more profitable with the things that you do. All right, step four is to get clear on your risks. Now, risks we often think about in different formats, but usually when we're talking about retirement planning, we're thinking about risks on our money. So volatility risk. So where are you exposed to market risks? If you're a real estate investor, what are the market risks on the rental market? What are the market risks on the appreciation, you know, that you're looking at? Are you in a really hot market that maybe there might be a cycle that happens that reduces that. Things of those nature you should be considering. Also be aware of things like geopolitical risks that could be facing and how they might impact your money. Then you also want to get clear on risks to things like your income. So you're still in your working years today or you're, you know, you've got your business. Then what are your income risks? Could you lose a key employee on your business team? Could you lose a business partner? Could you lose a spouse where there's income sources there and how are you planning for that? Is there insurance in place that makes sure that we solve for that gap and that problem so that the engine can keep on moving and it doesn't interfere with any of your planning around the actual retirement that you seek. Another important risk is just the income risk of yourself. If you get ill or you get critically ill or perhaps disabled in some way and you can't do the thing you're doing presently, how does that impact your income and how will that impact your savings as well? For the retirement you're planning, it's going to have a huge impact. These are things that you can plan for very effectively with the uses of some insurance. Good coaching, good mentorship, and a way to solve those problems effectively. So the fifth thing and the final thing that we really want to identify that I think is really important in your retirement planning. Obviously there's Many things around all of this that you can dig deeper into. But fundamentally what you want to do is you want to get a coach. You want to think about getting a coach who's someone you can build a relationship with, a lifelong relationship, someone that you can reach out to, that you can bounce ideas off of. You can have good, real hard world discussions about what your future might look like. And as things shift and change in your life, you want to be able to have a coach there that you can connect with and rely upon to be able to discuss those ideas and see how you might modify or change your plan and the direction of your life. I don't know about you, but if you're watching this, I would venture to guess sometime in the last five years there's been a major event that's happened in your life. Transmission went on a car, a newborn that showed up in your life, a grandchild was born, maybe a family member passed away prematurely, or there was a sickness that happened that impacted, or maybe there was a market correction, you lost a bunch of money on an investment. These are categorical things that happen for people, all kinds of people along the road of life. And we don't know when they're going to happen. And so when they take place, you want to be able to reach out to someone, a third party person who you have a relationship with, that you can have a deep discussion to figure out what might you do to correct that issue, or how might you take that newfound money that showed up and put it into your plan so that it could produce more for you. So you really want to make sure you have a coach that you have building a relationship, and they can talk to you through all kinds of things, maybe around building a business or growing the business that you have. Maybe there's an idea that you have that they can help you facilitate into turning it into intellectual property, something that produces cash flow. Maybe there's a book that you have in you to write. In fact, I think everyone's got a book within them to write. So that could be another source of possible income in your future. It's important to understand that there's many ways to create money. There's people creating money, so there's active work. Someone's actively doing something in the physical realm to create the money. Now you, you could be that person, or you could have other people, the leverage of people power doing that. There's money creating money. So then you have, that's investment power, that's putting capital to work in an area that produces either a stream of income or future appreciation. Then there's systems that create money. So maybe it's a business that you have, you own a business asset, you bought a franchise that has a system. Maybe you're not ultimately involved, you're just kind of overseeing things, and that system is what's doing a lot of the work. And then, of course, there's ideas, ideas that can create money, ideas that bring value. That could be creating and writing a book that now produces an income because you have book sales. It could be helping someone learn how to market something. It could be inventing a product or a solution or a service. These are the kinds of things that are different areas where you can create value and that value can produce income well into your retirement years. Many of those are things that can produce a lifelong income. In fact, many of them are things that can even be willed to your family members or create an additional income stream that actually outlives you. You know, think of a music artist who has, you know, got albums that people are buying today, and that artist is no longer alive, and their family is still receiving royalties off of that one piece of music that they created so many years ago. So there's lots of opportunities on how you can do these things. Good planning is the key. Think about these five core aspects of your retirement planning. When you're looking at setting things up for yourself, go ahead and reach out to a coach. Consider a coach on our team at Ascended Financial. We've got some great people there that can help you navigate some of these many ideas and create a great strategy on how you can get up and running and get started.