At our first meeting, the 75-year old widow shifted uncomfortably in her chair. Her unease was palpable as she clutched her son’s hand.
And her voice wavered as she asked: “Is it too late for me to make a financial plan?”
Gail’s late husband had always taken care of their finances. With his passing, she was overwhelmed by the financial responsibilities she had previously left to him.
She didn’t fully understand her cash flow, hadn’t optimized her savings, and was afraid to spend money, worried she might not leave enough for her family.
And that’s the thing - she had goals.
Family was everything to her.
She dreamed of taking her children and grandchildren on a family vacation, making precious memories together before she was unable to travel.
And she was also determined to leave a legacy for them when she passed.
It’s Never Too Late to Make a Financial Plan
Whether you’re 18 or 80, a solid financial plan helps build and protect your wealth.
At 75, Gail had never had a financial plan. Even when her husband was alive, they hadn’t put much thought into their finances. They had a steady income from his pension and their government benefits, and a healthy balance in their savings account from downsizing to a smaller home. They were comfortable.
But without a clear financial plan in place, seniors may face a number of challenges, including:
● Inefficient income withdrawals
● Unexpected healthcare costs
● Increased tax burden
● Running out of money
Fortunately, having worked with us for several years, Gail’s son knew that we could help his mom take control of her financial situation.
Understanding Cash Flow in Retirement
One of the first things we discussed with Gail was her cash flow.
Gail had predictable income sources such as CPP, OAS, and a pension, along with a sizable nest egg. However, she didn’t have a clear picture of how much was coming in and how much she could afford to spend. She worried about every expense.
Understanding cash flow in retirement isn’t just about budgeting - it’s about ensuring your money lasts as long as you do. A certified financial planner can help with creating a realistic budget, planning for unexpected costs, ensuring the nest egg doesn’t run out, and passing on the highest legacy to the next generation in the most efficient manner.
Optimizing Savings in Retirement
Gail had over $500,000 in savings, but she didn’t know how to make the most of it. Like many retirees, she was nervous about investing.
Given her age and risk tolerance, we looked at conservative options such as low-equity Segregated Funds, GICs (Guaranteed Investment Certificates) and high-interest savings accounts. These options provide stability, low volatility and predictable returns. We also explored annuities, which can provide Gail with a guaranteed income for life, giving her peace of mind that she won’t outlive her savings.
Finally, we provided her with a clear roadmap for investing and drawing down her savings to minimize the tax impact.
Estate Planning and Leaving a Legacy
Leaving an inheritance was Gail’s biggest concern. She was afraid that spending her money now would mean leaving less for her children and grandchildren.
As part of Gail’s financial plan, we suggested some estate planning steps and strategies that she could incorporate, including:
● Moving some of her mutual funds into Segregated Funds which locks in the gains to date on death and bypasses probate significantly reducing wealth transfer time and fees.
● Ensuring the annuity has a death benefit attached to it so if she passes earlier than expected, the present value of her remaining annuity goes to her children.
● Updating her will to ensure her assets would be distributed according to her wishes.
● Considering life insurance as a tool that could allow Gail to leave a specific amount to her family without depleting her savings.
● Gifting during her lifetime, which could help her family while she’s still around to see the benefits and lower the final tax bill.
With careful planning, Gail saw that she could enjoy her retirement while still leaving a legacy.
Empowering Seniors With Financial Planning
Armed with a comprehensive financial plan, Gail now feels empowered.
She understands her cash flow, has optimized her savings, and has a clear estate plan.
And best of all, she no longer feels overwhelmed and can enjoy her retirement knowing that she is financially secure because not only will she have funds for her lifetime, but she can also take her kids and grandkids on that trip of a life time, spoil them a bit during their lifetime and also leave them with a nice gift when she passes.
If you or your loved ones are feeling uncertain about financial strategies for seniors, you don’t have to navigate it alone. Book a call today!