Rock solid
Establishing disciplined investment priorities is critical at age 35
Alot can change between the ages of 35 and 45 — and developing a solid financial plan that reflects those changes is critical.
“At this age, people are beginning to accumulate financial assets and many are entering a period of their lives where their focus is family commitment,” says Alex Laberge, certified financial planner, senior financial adviser, at Scotiabank in North Vancouver, B. C. “Their incomes may be rising but most are still not in their peak income years. They’ve recently bought a house or are making plans to buy one.”
While many in this life stage have already thought about or even developed a financial plan, retirement is still far away. They’re typically accumulating retirement funds through workplace programs designed to plump up their retirement savings plan ( RRSP) or tax- free savings account ( TFSA), but they haven’t begun saving strategically.
“Other priorities are more immediate, including getting their kids through school, getting back to work after maternity leave or buy- ing a house,” says Laberge.
Sitting down with a financial adviser at this stage of life should help to set priorities among competing goals and develop the financial discipline to ensure that all of those goals are being met.
“In this age range, we generally see customers start to turn their attention towards their retirement plans,” Laberge says. “They realize that they can’t live on the Canada Pension Plan and Old Age Security alone. We can use Scotiabank’s financial tools to plug in all of their savings, investments, assets, future expected income and pensions and then share projections on where they stand. We often ask our customers to start by looking at their current lifestyle in order to visualize their retirement. We show them how much they’ ll need in retirement — and how much they’ ll need to save each month if they begin saving today as opposed to five years from now. There’s a pretty significant jump in the amount they’ll need to save if they wait.”
Laberge advises customers to begin building savings discipline and reviewing their financial plan regularly, perhaps funneling half of a pay increase into savings before they become accustomed to spending it. At that point, the greatest motivator becomes proven success.
“They can still enjoy part of the pay increase,” he says. “After a year, it can be pretty satisfying to see how quickly t he savings accumulate. When customers come back for a follow- up meeting, we run new projections for them to show how they can ramp up the savings even more.”
Cus t o mers can also choose to invest in GICs and mutual funds.
“It’s important to look at all of your investments over the long term,” he says. “Every customer’s situation is different and is affected by their life cycle, which is why we recommend seeking tailored, personal advice from an adviser. Markets are cyclical, and we recom- mend taking a long- term approach to investments.”
Laberge also encourages customers to come in with their spouses or partners to ensure they maximize their investments and create a more accurate financial projection.
“Not every couple discusses finances at home,” he says. “Financial planning is one of the most important conversations you can have, and I find that some couples are more comfortable having a no- obligation conversation with me than they might be at home. As their financial picture changes, we can revisit that conversation. Each time, it becomes easier.”
This article is for general information purposes only and is not intended as specific financial or tax advice.