PERSONAL INVESTMENTS

HELPING YOUR CLIENTS REACH THEIR GOALS

Scenario/Illustration Not Guaranteed

• Retirement scenarios are estimates that help determine if your clients are on the right track to reach their retirement goals.

• Actual results will vary.

• The objectives and other variables used in the scenario may change as well.

• Periodic reviews of the retirement scenario is highly recommended to avoid any surprises due to changes and actual results.

By identifying specific financial goals, there’s a much better chance that

clients will commit to invest.

Why are you investing ?

Vacation

Retirement

Wedding

Car

Dream Home

Clarify Goals

• Determine how much money is needed to realize the goal.

• What’s the desired timeline to achieve the objective?

• Use available tools to establish investment strategy.

• Manage your clients’ expectations by addressing any gaps that appear when determining required strategy to reach their goal on time.

Tools to Help Determine Strategy

Scenario• What? – Down payment for property• When? – 5 years• How much? - $20,000• Budget for this goal? - $200 a month

With a simple savings or accumulation calculator, you can first determine if:

1. the goal is attainable given the client’s budget and timeline;2. if it’s not attainable, what changes are required to attain the goal.

www.assumption.ca

Enter information related to the investment objective:

Tools to Help Determine Strategy

Provide the options for adjusting the savings strategy:

Retirement: the goal on everyone’s mind

• Clients can have many financial goals and those goals will be different from one person to the next.

• One goal that most everyone has, is retirement.

• However, the definition of retirement is different for everyone.

Retirement as a Financial Goal

Necessary information:• When will retirement start?• How do you see yourself living during retirement? What will

the expenses be?• What are the sources of retirement income that will be

available?– Government pensions– Employer pension– Personal savings– Severance pay / Retirement allowance– Sale of asset / Downsizing

• How long will retirement last?

Retirement as a Financial GoalBefore determining a personal investment strategy for your client’s retirement, it’s important to take into account the various sources of retirement income your client will have.

CPP

OAS

Employer

Pension

PersonnalEtc.

Sources of Retirement Income

• Government pensions (CPP / OAS)

• Employer pension

• Personal savings

Sources of Retirement Income

Canada Pension Plan – Retirement Benefit

Maximum benefit for 2015 $1,065 per month (taxable)

Average benefit $500 per month (taxable)

Normal retirement age 65

Minimum retirement age 60

Maximum retirement age 70

Benefit based on: How long and the amounts contributed by taxpayer to CPP since age 18.

http://www.servicecanada.gc.ca/eng/services/pensions/cpp/payments/index.shtmlTo get a more precise estimation, client can call 1-800-277-9914.

Sources of Retirement Income

Old Age Security Pension

Maximum benefit 2015 $563.74 per month (taxable)

Average benefit $500.00 per month (taxable)

Minimum age 65(67)

Benefit based on:Number of years recipient has

been a resident of Canada between age 18 and 65.

http://www.servicecanada.gc.ca/eng/services/pensions/oas/pension/index.shtml

Sources of Retirement Income

• Government pensions (CPP / OAS)

• Employer pension

• Personal savings

Defined Benefit Plan

Retirement benefit is based on the number of years in

the plan and the employee’s salary.

Defined Contribution Plan

Retirement benefit is based on the amount

accumulated in the employee’s pension

account.

Consult your client’s pension statement and/or employee benefit guide for details on the DB pension plan.

Consult your client’s pension statement for the current value of your client’s DC pension plan.

Sources of Retirement Income

• Government pensions (CPP / OAS)

• Employer pension

• Personal savings

Importance of Personal Savings in Retirement Plan

• Depends on the amounts of retirement income from other sources, mainly pension plans.

• People without pension plans will generally need to contribute more to there personal investment plans (RRSP, TFSA, etc.) to reach their retirement goals.– Self-employed– Professionals (i.e. doctors, lawyers, accountants, dentists, etc.)

• People with generous pension plans may still need to contribute to their personal plans, especially if their retirement objective is high.– Retiring at a young age.– High annual income required.

Prepare a Retirement Scenario

• Many retirement calculators available on the internet– Financial Institutions such as banks and insurance companies– Service Canada website

(http://www.servicecanada.gc.ca/eng/isp/common/cricinfo.shtml)– Education websites (i.e. GetSmarterAboutMoney.ca)

• Your choice of financial planning software– Typically, you will have more flexibility with a financial planning

software to create more complex retirement scenarios and include two people in the same scenario (couples).

Basic Retirement Scenario

Scenario• Client is currently 45, would like to retire at 62.

• Current salary = $70,000

• CPP benefit estimated at $750 monthly in today’s dollars, starting at age 62.

• OAS benefit estimated at $500 monthly in today’s dollars.

• Employer defined benefit pension estimated at $3,500 per month. According to employee guide, this benefit is not indexed to inflation.

• Client expects to contribute $300 per month in his RRSP.

• Goal = 70% of current income, indexed to inflation.

Enter information related to the retirement objective.

Indicate which pension amounts are indexed to inflation.

Indicates age at which personal retirement savings is expected to run out.

Options to Reach Retirement Objective

SSTTEEWW

• Save more

• Take less

• Earn more

• Wait

Determine Goals, Establish Plan

When clients have specific goals they want to achieve, and see what they need to do to reach those goals, there’s a much better chance they

will commit to the investment plan you will recommend.