Ten retirement questions

Ready to start building your retirement plan? Creating a financial map for life after work is an in-depth process that needs careful thought and expert guidance, regardless of your level of wealth.

It’s the best way to ensure you achieve your dreams and goals for retirement, says Desmond Martin, an investment counsellor at Mawer Investment Management Ltd., a privately owned independent investment firm—with offices in Calgary, Toronto and Singapore—that manages more than $40-billion in assets.

“Studies have shown that people with documented goals tend to be more successful,” says Mr. Martin, who is based in Calgary. “For example, one study of Harvard University graduates found that the ones who set down their goals in writing earned significantly more than their cohorts.”

Without a financial plan, it’s hard to know where and how to proceed, he says. As a result, some investors default to ineffective goals, such as beating the market, and they tend to make decisions based on emotions.

“Having a plan will help you highlight where you need to focus and where you need diversification in your portfolio,” says Mr. Martin.

Acknowledging that creating a retirement plan can be daunting, Mr. Martin offers these 10 questions to help kick-start the process:

1. When do you want to retire?

Having a concrete idea of when you want to retire gives you a sense of how much the portfolio will need to produce—and for how long.

2. Where do you want to live?

Do your retirement dreams have you summering in the country and wintering in a beachside home in the Caribbean? Where you live in retirement can have a significant impact on your income and property tax bracket, health-care coverage and even your estate plan. Depending on where you live and how you long you stay in a place, you may also be subject to certain tax-reporting requirements.

3. What do you think you’ll be doing in retirement?

Do you see yourself travelling quite a bit? Or maybe you plan to launch a second career as a consultant? Knowing how you’ll be filling your days in retirement is critical to building a solid retirement plan.

4. How healthy will you be?

Health problems in retirement could mean you’d have to adopt a lifestyle different than what you had originally envisioned. Or it might mean a bit of tweaking here and there to allow you to realize your retirement dreams. Either way, it’s a good idea to take potential health issues into account when building your retirement plan.

5. Will you be supporting other people?

If you see yourself lending a hand financially to others (such as children or grandchildren) after you leave work, then your investment portfolio needs to be designed and managed to ensure you can support this reality.

6. What are your plans for charitable giving?

Whether they’re given in cash, stocks, an insurance policy, or real estate, most charitable donations trigger some kind of tax benefit for donors. That’s why it’s important to plan charitable giving (which could include complex structures such as charitable foundations) well in advance and with the right financial and tax professionals.

7. Do you want to leave something for the next generation?

If you intend to leave money or property to your children and grandchildren, start working on your estate plan now. A carefully considered plan will help you preserve as much of your assets as possible for the next generation, minimize tax liabilities for your estate and beneficiaries, and anticipate sensitive issues that could lead to conflict between family members.

8. If you are in a second or third marriage, have you made arrangements to ensure your assets are distributed according to your wishes after you pass away?

Having a detailed financial plan that is backed by a will and provisions (such as a trust fund) is especially important to ensure the surviving spouse from a second, third or fourth marriage is well looked after, and that money is passed on to those for whom it was intended. Without such a plan, a surviving spouse could be left with limited claims to your estate, or in some cases, children from a surviving spouse’s previous marriage might end up with money you’re setting aside for your own kids. Without such a plan, a surviving spouse may have to rely on provincial family law to have a claim to your estate.

9. Own a business? What’s your exit strategy?

Do you plan to sell your business, pass it to a family member, or just shut it down when you retire? You’ll need to figure out the answers to these questions, even if you’re years away from retirement. Selling a business takes a lot of preparation, and finding the right buyer can take months. Without advance planning, you could be forced to sell your business at a reduced price to meet your retirement timeline.

10. Do you and your partner agree on your retirement plan?

It’s critical for you and your partner to see eye to eye on your retirement plan. This includes getting consensus—or at least some form of compromise—on how you both want to spend your retirement years and how much of a nest egg you need to build.

Disclaimers:

This communication is an overview only and it does not constitute financial, business, legal, tax, investment, or other professional advice or services. It is not intended to be a complete statement of the law or an opinion on any matter. If you (or any of your family members) are a U.S. citizen, hold a U.S. green card, or are otherwise considered a U.S. resident for U.S income/estate tax purposes, the Canadian and/or U.S. tax implications could be substantially different from those outlined herein. No one should act upon the information in this communication as an alternative to legal, financial or tax advice from a qualified professional. No member of Mawer Investment Management Ltd. is liable for any errors or omissions in the content or transmission of this email or accepts any responsibility or liability for loss or damage arising from the receipt or use of this information.

While we endeavour to ensure that the information in this communication is correct, we do not warrant or represent its completeness or accuracy. This communication is not updated, and it may no longer be current. To the maximum extent permitted by applicable law, we exclude all representations, warranties and conditions relating to this communication.