For the most part, I love planning. I already have the cutest collection of outfits for our yet-to-be-born grandchildren. I’m currently planning my upcoming girl’s weekend, next month’s book club as well as our next gourmet dinner club. My husband and I are in the middle of arranging a few summer escape weekends and dreaming of more exotic adventures.
However, there’s one plan that must come before all others: a financial plan.
I talk about financial planning every day in my practice, but I’m seeing its importance play out in my life right now. For example, I often see friends dipping into retirement savings to help out aging parents, and others whose struggling adult children are moving back home. Some are setting money aside so their kids can buy that starter home in Toronto, or to help pay for their grandkids’ educations. Other friends are considering significant lifestyle changes like selling their city homes and moving to Muskoka, Collingwood or Haliburton. All of these things have to be taken into consideration when you are figuring out your financial future.
And then there are the life events that you cannot possibly plan for, but that you must plan for. I ran into friends on one of the coldest days this winter and asked why they weren’t at their home in Florida. The response was that they had to rent it out this year because they couldn’t afford the American dollar. (When they bought in 2013, our Canadian dollar was worth more than the American.)
Even the best-laid plans can be torpedoed
Even the best-laid plans can be torpedoed by circumstances beyond your control. Markets around the world crashed in 2008 thanks to the sub-prime crisis in the United States. Was there a financial plan anywhere that wasn’t negatively impacted by that? More recently, the price of crude has impacted Canadian markets and is, in turn, affecting financial plans.
People are living a lot longer
Sure, you’ve worked hard for what seems like forever and you probably do deserve to retire at 55. But what next? Advances in health care and education have impacts many people still aren’t taking into consideration. Everyone is living longer, so if you are going to retire early you should be planning for up to a 50-year retirement. Many of us are already feeling those effects as we have to help parents who never expected to live as long as they have.
Supporting adult children
At the other end of the spectrum, how many of us are continuing to support adult children who are not only in a tougher job market than any we faced, but cannot move out because of unaffordable housing prices?
Consider all contingencies and variables
The point is this: Plan carefully, taking in all contingencies and variables. Know how much risk you are willing to undertake, and know where you are and where you expect to be. Work with an advisor you trust, put your plan in place and then you can truly enjoy those exotic vacation adventures—you know, that other stuff you’ve been planning.
This article is supplied by Elizabeth O’Connor, Investment Advisor with RBC Dominion Securities Inc. Member-Canadian Investor Protection Fund. Elizabeth O’Connor can be reached at 705-789-2100 or [email protected]
Whether you are looking for a full time, full service financial advisor or seeking expert financial advice as a second opinion, call Elizabeth. With offices in Haliburton, Huntsville and Bracebridge, Elizabeth works closely with clients in cottage country from the lakes and surrounding towns.
Elizabeth O’Connor is an Investment Advisor with RBC Dominion Securities, which is a member of the Canadian Investor Protection Fund. 705-789-2100