by Tom Mason

 
 
Alex Skoke, Senior Financial Planning Advisor with Assante Capital Management Ltd., likes to divide investors into two groups –– spenders and savers. “The savers are easy to work with,” he says. “They’ve already developed some of the skills they need to plan for retirement. The spenders take a little more work.”
 
Skoke started his career at Assante Capital Management Ltd. by offering corporate employees group presentations on how to turn money from pensions and other savings into a post-retirement income stream. After the presentation the hands would shoot up. “Everybody had the same basic question,” he says.  “‘Will I have enough in my pot when I’m ready to retire? Am I going to have a sufficient income stream to live comfortably?’”
 
It’s a question that most people ask themselves from time to time. Figuring out the answer can take work and dedication, according to Skoke. “Taking care of your retirement portfolio is like going to the gym,” he says. “It’s something you have to turn into a regular habit if you are going to make an impact on your financial health down the road.”
 
When is it time to begin retirement planning? The younger the better says Chris Ball, Senior Financial Planner with Assante Capital Management Ltd. “The ideal time to start mapping out your retirement is in your 30s. The earlier you do it the more you’re going to see the results of your planning. You’re going to see the miracle of compounding at work.”
 
A solid retirement plan is key to making sure that the process goes smoothly. To get started, it’s vital to sit down and take a hard look at your current financial priorities. Understanding the things you need to pay for today –– rent, mortgage, student loans, consumer debt –– will guide you to how much money you can put aside for retirement. Once you’ve determined that, you can start working on a comprehensive retirement plan.
 
Next, define the kind of lifestyle you would like to have during your retirement years. If you looked at your financial priorities in step one, you already have a pretty good sense of what that entails.
 
Once you’ve established a retirement plan, it’s important to revisit it over time, reassess, revise and update it, according to Ball. Things change –– the markets, your personal earning power, disposable income and your ability to save –– making a retirement plan always a work in progress. Ball recommends scheduling yearly planning sessions with a financial adviser to fine tune a retirement plan.
 
“You need to keep revising your will to account for changes in your life and your priorities,” he says. “You need to make sure your beneficiaries and your wishes are up to date. Also you need to take advantage of new tax-saving rules as they come along, things like spousal RRSPs, for example.”
 
Many investors get caught up in the idea that their retirement portfolio should be large enough so that the interest from the fund will be enough to see them through a comfortable retirement. Encroaching on the capital isn’t always a bad thing, especially if it’s part of a well-considered plan, says Ball. “A sustained income portfolio can be created to allow you to spend more money in the early years of your retirement when you’re more active and mobile.”
 
J.P. Collins is a Wealth Advisor with Assante Capital Management Ltd. He says assets and net worth are just a part of the equation. An effective plan also needs to consider things like inflation and cash flow predictions. And after you’ve calculated the annual amount that your retirement lifestyle will cost, you also need to factor in extra expenses, says Collins. “Are you going to buy a new car every five years? Do you want to travel? Are you likely to have hidden expenses? These are all things you need to consider.”
 
That can be a hard concept for younger clients. With them, Collins takes a different tack, and doesn’t spend much time talking about retirement. “It probably doesn’t mean anything to them if retirement is 30 years away. What I do with my younger clients is to get them to look at saving strategies –– to work to get them in that mindset.”
 
The concept of retirement has changed a lot over the years, and retirement plans need to adapt to keep up with those changes, says Collins. “When many of our ideas around retirement were established, most people were only living a few years after retirement,” he says. “Retirement came to be thought of as an all-too-brief reward after a life of hard labour. These days a lot of clients are retiring young and living a long time.”
 
The main challenge is one of balance ––finding a balance between enjoying your money and making it last until the end of your life. “To do that, you really have to establish what your lifestyle is going to be ahead of time,” says Collins.
 
Alex Skoke agrees. “It all comes down to the life you want to live in your golden years. If you put the work in on your retirement plan, you should be able to make that happen.”
 
Establishing a good working relationship with a financial advisor that you trust is a vital first step in the retirement process, says Skoke. “I specialize in retirement, but I’ve never retired. I’ve never done the thing that I claim to be an expert in. But I retired my first client in 1998 and he’s still with me today.”