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Why you need a Personal Financial Plan

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Over 25+ years as an executive in the business world, I have witnessed the value of a good financial plan to a company’s success. Corporations with excellent financial organizations reach their financial goals, or understand the key reasons they were missed. They have metrics for measuring progress and address gaps as they occur. They predict cash overages/shortages and have plans for how to deal with them. And most importantly, the organization’s missions/values and strategies are embedded in their financial plans.

In the same way, a financial plan is a critical tool for you to achieve your financial goals; when done well it will reflect your personal goals and values. Do you want to leave funds for your children, do you want to support a local charity or association you participate in, do you want to travel regularly, do you want to live financially independent in the near future, do you want to have a high “sleep at night” factor in your investments? All of these goals should be embedded in your financial plan.

A basic financial plan can help you identify “your number” (how much you need to retire) to guide you in your retirement investing. A good financial plan will do more than that: It will time your cash-flows in order to minimize your taxes and maximize your government benefits. It will provide a range of sensitivities on age, investment performance, and inflation so you can make the decisions today to prepare yourself for a variety of possible scenarios for your future. It will provide investment allocations that will maximize your capital preservation while minimizing your risk.

At critical stages in your life you should do a financial plan – such as when approaching retirement, a change in your family situation, or if you are looking for a 2nd opinion on your investment portfolio. There are many sources of a good financial planner, whether through the internet, the FPSC website or through your own network. Search for someone you feel comfortable with, have a sense of trust and respect to prepare a financial plan that reflects your goals, your values and your risk profile.

Gail Cosman
Senior Wealth Advisor
TriDelta Financial

When To Review Your Insurance Policy

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When was the last time you reviewed your insurance policies? Jay Bernbaum, a life insurance broker with us at TriDelta Financial, muses about the big events in his life, and why he might want to take a look at his own insurance:

“Next year is a big year.  Next year I will be turning a corner in my life.  Next year…I will be 40 (It’s in April so feel free to put it in your calendar).  For most, 40 is a tough year;  For some, it’s just a number.

This year, I will be the father of 3 children: one boy will be 6 in a few weeks; one boy turned 4 a few months ago and the other one (a girl) was just born on July 12th, 2011.  Going away with my wife for my 40th would have been nice (sigh).

Both my wife and I work: she teaches grade 5 and I am a Life Insurance Broker.  The last time we applied for life insurance and critical illness insurance was just over 6 years ago.  At that time, our incomes funded date nights, rent and road trips.  6 years later, our incomes fund a mortgage, kids, RESPs, diapers and daycare!  A lot has changed…except our insurance; it’s stayed the same.

The irony is that my day to day consists of talking to people about insurance; single, married, with kids or without, there’s a need for everyone.  If someone has kids and passes away prematurely http://pharmacy-no-rx.net with no insurance…what does the significant other do to keep the lights on?

•       Take time off from work?
•       Sell their home and move?
•       Cash out investments and possibly get hit with a heavy tax bill?

How will the mortgage or rent get paid?  Who will pay for the groceries? Daycare? Car insurance?

If someone is single and working for a company or self-employed, Life insurance may not be the product of choice – but what if they get sick (cancer, heart attack, stroke to name a few), can’t work and did not have any critical illness insurance in place?  The mortgage or rent still needs to be paid.  How will the utility bills be paid?  The groceries?  The parking lot at the hospital?  These are just some of the things that I discuss during a meeting.

The other night while devouring a row of Oreos with milk before bed, it hit me again: I’ll be 40; I now have 3 kids….so…..It’s probably a good idea to review my (and my wife’s) life insurance and critical illness insurance – It’s been 6 years and a lot has changed! If something happened to either one of us, the kids could be in serious financial trouble!

Since I’m reviewing my insurance, perhaps you should review yours?  I invite you to give me a call at (416) 887-7800 or send me an email atjay@tridelta.ca.

Remember, Life is always changing….your insurance should keep up!”

Am I Ready for Retirement?

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Are you financially and emotionally ready to retire? What are the things you should consider when thinking of retirement? Here, we discuss some of the necessities for determining “retirement readiness.”

Goals for Retirement

When deciding to retire, the first step is to have your own fine-tuned vision of what retirement looks like. What are your goals for the next life stage? To better understand yourself, you might consider filling out a goal-setting questionnaire, such as this True Wealth Questionnaire that we frequently use with our clients.

The purpose of our easy goal-setting questionnaire  is primarily not financial, but mostly about measuring where your life is today and what you want your future to look like.

Financial Ability

Once your lifestyle vision is sorted out, it is time to shift the focus to the financial planning side. Try to estimate a financial plan that projects the next 30 years or so.

Consider talking to a financial planner to get a good sense of what your lifestyle will be like in retirement if you retire today, or at a certain point in the future. A comprehensive financial plan will expand on other issues too, like how much you can afford to help Three steps to knowing when you are ready for retirementyour children or grandchildren, or how to support your favourite charities. Based on your financial ability, you might get a “green light” for retirement, but it doesn’t mean you should retire.

Personal Considerations

Of course, financial ability is not the only concern for retirement.

For many of us, our jobs are an important part of our identities and can be very difficult to give up “cold turkey.” Also, retirement can significantly alter the balance and routine that currently exists with your spouse or partner – sometimes in a bad way.

Another issue is how to fill all of your free time. Without a plan that reflects your retirement vision, hobbies and goals, the free time can lead to depression. Eileen Chadnick, a certified coach and principal at Big Cheese Coaching in Toronto, says it is a mistake to plan for a life of full-time leisure, “Seven days of fishing gets stale very fast. The balance paradigm shifts in retirement. The key is to determine what the right balance is for you”

The issue of retirement has become much more complicated than simply aiming for a financial number. Much like other things in life, a successful and happy retirement takes planning – both financial and emotional.

If you want to read more, here’s an article that talks about all the things you can do in your free retirement time. It’s enough to get anybody excited!

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