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Navigating Your Financial Future

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Retirement Planning Process
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Navigating Your Financial Future

  1. 1. Navigating Your Future New Retirement Realities Presented to you by: Grant Ackerman, B.Comm, CFP, FCSI, FMA, CH.P. Strategic Wealth, Associate Investment Advisor TD Waterhouse Private Investment Advice
  2. 2. Our discussion: <ul><li>Your view </li></ul><ul><li>Navigating your future </li></ul><ul><li>Things to think about </li></ul><ul><li>Living the life you want </li></ul><ul><li>Building your plan for the future </li></ul><ul><li>Today, tomorrow and yesterday </li></ul>
  3. 3. Your View What do you want your future to look like?
  4. 4. What do you want your future to look like? “ Your future is unique to you ”
  5. 5. Your View How much longer do you plan to work?
  6. 6. How much longer do you plan to work? Source: McKinsey Consumer Retirement Survey, 2006 Almost half of all Baby Boomers expect to work past the age of 65 . . . but only 13% of Retirees have actually done so. Average Age of Expected Retirement vs. Actual: 40% of Retirees were forced to stop working earlier than planned for the following reasons: Care for spouse or family member Health-related issues Job loss / downsizing The average retirement age in Canada is 61 years. Source: McKinsey Consumer Retirement Survey, 2006 Expected Actual 2% 53% 45% 27% 60% 13% <55 55-65 66+
  7. 7. Your View How long will your journey be?
  8. 8. How long will your journey be? Once you reach 65, chances are good you’ll outlive your initial life expectancy by at least a decade! Source: Canadian Institute of Actuaries. It could be longer than your career! 50% chance of living to 86 25% chance of living to 92 86 92 25% chance of living to 89 89 50% chance of living to 83 83 At least one person has a 50% chance of living to 90 At least one person has a 25% chance of living to 94 90 94 Male age 65 Female age 65 Couple both age 65 100 95 90 85 Age 80
  9. 9. Redefining your journey Source: Insurance Advisory Board, 2006 OLD Timeline People are retiring 10 years younger and living 10 years longer  20 year gap NEW Timeline Work for over 40 years Life expectancy of 70-75 Retire at 65 Build a career Live until 80+ Retire at 55, travel, work part-time, start a business, volunteer, etc. 5-10 Years 25+ Years BABY BOOMERS (Born 1946-1966) Age 40-45 Age 55-60
  10. 10. Navigating Your Future New Retirement Realities… <ul><li>Canadians are concerned about: </li></ul><ul><ul><li>Mortality and Longevity </li></ul></ul><ul><ul><li>Spending and Inflation </li></ul></ul><ul><ul><li>Portfolio and Investment Returns </li></ul></ul><ul><ul><li>Health </li></ul></ul>Source: TD Bank Financial Group 2008 Investor Poll
  11. 11. Your View How much will you need? 1. Mortality and Longevity Concerns
  12. 12. Concern #1. Mortality and Longevity <ul><li>Key Concerns </li></ul><ul><li>Will my money last? </li></ul><ul><li>Will I be able to maintain the same standard of living? </li></ul><ul><li>Will there be something left for my family? </li></ul><ul><li>Things to think about… </li></ul><ul><li>Consider how long you will have to save </li></ul><ul><li>Plan to live longer, plus add a safety net </li></ul><ul><li>Separate “nice to haves” from “must haves” </li></ul><ul><li>Inventory your future income sources </li></ul><ul><li>Consider transition options </li></ul>
  13. 13. The facts… <ul><li>Amount Needed for Annual Retirement Income of $55,000* </li></ul>*Data Source: TD Waterhouse Assumes: 6.4% average annual return, initial annual withdrawal of $55,000, 2% annual inflation rate, average monthly OAS $476, average monthly CPP $481, taxes are ignored. Canadian’s are living longer, retiring earlier and often have to fund one year of retirement for every year worked. If you retire at 65 and live until: $717,124     Age 95 $651,850     Age 90 $570,896     Age 85 $470,494     Age 80 $345,972     Age 75 $191,536     Age 70
  14. 14. Your View How much can you spend? 2. Spending and Inflation Concerns
  15. 15. Concern #2. Spending and Inflation <ul><li>Key Concerns </li></ul><ul><li>How much will things cost? </li></ul><ul><li>What about inflation? </li></ul><ul><li>What should my monthly or annual budget look like? </li></ul><ul><li>Things to think about… </li></ul><ul><li>Consider including investments that outpace inflation in your investment mix </li></ul><ul><li>Determine your future expenses, income sources and the frequency of each </li></ul><ul><li>Draft a long-term and short-term budget </li></ul>
  16. 16. <ul><li>Even low inflation will impact what you can buy </li></ul>*Assumes no growth Source: TD Bank Financial Group inflation calculator 20 years from now, $1000 today will only buy $673 at an inflation rate of 2% The facts… The impact of inflation*: buying power of today’s dollars. $355 $411 $478 $554 $642 $744 $862 $971 3% $500 $1,000 35 $552 $1,000 30 $610 $1,000 25 $673 $1,000 20 $743 $1,000 15 $820 $1,000 10 $906 $1,000 5 $980 $1,000 1 2% No Inflation Year #
  17. 17. Your View What will your portfolio earn? 3. Portfolio and Investment Concerns
  18. 18. Concern #3. Portfolio and Investment Returns <ul><li>Key Concerns </li></ul><ul><li>How will my portfolio perform? </li></ul><ul><li>Will it generate enough income? </li></ul><ul><li>Which investments protect assets? </li></ul><ul><li>Things to think about… </li></ul><ul><li>Consider holding a diversified portfolio to minimize risks </li></ul><ul><li>Consider holding cash or equivalents to cover two years of payments </li></ul><ul><li>Structure your asset mix to ensure appropriate safety and growth specific to your needs </li></ul><ul><li>Consider using a more conservative withdrawal rate in your early retirement years </li></ul><ul><li>Review your retirement income plan, spending rates and asset mix regularly </li></ul>
  19. 19. The facts… Source: Global Financial Data, Bloomberg, Research Marketing Group Historical Perspective Asset Class Returns 1935-2006
  20. 20. The facts… Source: Global Financial Data, Bloomberg, TD Waterhouse Portfolio Advice & Investment Research Group 1 Year-end holding period (years) Time Equity Risk Diminishes with Time Rate of Return for Stocks (TSX 1950 – 2006), Highest/Lowest 45% -26% 37% -14% 25% 0% 17% 3% 14% 7% 12% 9% 2 5 10 20 30 -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0%
  21. 21. Your View 4. Health Concerns How would a change in health for you or a family member affect your standard of living?
  22. 22. Concern #4. Health <ul><li>Key Concerns </li></ul><ul><li>How much does long-term care cost? Can I afford it? </li></ul><ul><li>Will I need to take care of a family member? How will it impact my standard of living? My work? My lifestyle? </li></ul><ul><li>Who will take care of me or my family if something were to happen to me? </li></ul><ul><li>Things to think about… </li></ul><ul><li>What can you do to take better care of yourself </li></ul><ul><li>Investigate care options early to understand what is available </li></ul><ul><li>How can you protect yourself and your family against the impact of health changes or illnesses </li></ul><ul><li>Hold a family meeting to talk to your dependents and loved ones today </li></ul><ul><li>Take steps to ensure continuity of decision making </li></ul>
  23. 23. The facts… <ul><li>25% of caregivers report their employment situation has been affected by their care giving responsibilities 1 . </li></ul><ul><li>40% of caregivers in Canada have provided care for a relative or friend for over 5 years. 30% have provided care giving for over 10 years 2 . </li></ul><ul><li>40% of female caregivers and 30% of male caregivers report changing their social activities because of their care giving responsibilities; more than one third have altered their holiday plans; and 17% have altered their vacation plans 3 . </li></ul><ul><li>It is estimated that two-thirds of caregivers are spending more than $100 per month on care giving 4 . </li></ul><ul><li>Home care costs can range from 5 : </li></ul><ul><ul><li>$12 to $35 per hour </li></ul></ul><ul><ul><li>$100,000+ per year for 24 hour in-home nursing care </li></ul></ul><ul><li>Depending on the facility, long-term care costs can range from 6 : </li></ul><ul><ul><li>$1,200 to $10,000 per month </li></ul></ul><ul><li>Sources: </li></ul><ul><li>Health Canada, 2002 </li></ul><ul><li>Health Canada, 2006 </li></ul><ul><li>Health Canada, 2002 </li></ul><ul><li>Ibid </li></ul><ul><li>Provincial and public websites </li></ul>
  24. 24. How do I build a plan for the future? <ul><li>There is a lot to consider . . . </li></ul><ul><li>Number of years in retirement? </li></ul><ul><li>How will my portfolio perform? </li></ul><ul><li>What should my asset mix be to give me the returns and protection I need? </li></ul><ul><li>What inflation rate is realistic? </li></ul><ul><li>How do I budget and plan for the unexpected like health care cost? </li></ul><ul><li>How do I structure my own pay check? </li></ul>
  25. 25. Building a plan for your future… <ul><li>Start by thinking about your vision for the future </li></ul><ul><li>Write down what you know about your future </li></ul><ul><li>Prepare not to work in retirement </li></ul><ul><li>Expect to live a lot longer </li></ul><ul><li>Know your income sources and estimate your expenses </li></ul><ul><li>Adopt a long term perspective towards your retirement </li></ul><ul><li>Make asset allocation part of your strategy </li></ul><ul><li>Prepare today for the unexpected </li></ul><ul><li>Reframe your retirement perspective </li></ul><ul><li>Work with an expert, use on-line tools or calculators to evaluate or validate your assumptions and options to define a retirement plan that’s right for you </li></ul>
  26. 26. Navigating Your Future Yesterday Today Tomorrow
  27. 27. Disclaimer: <ul><li>The rates and information contained herein are based on sources and materials believed to be reliable, but are not guaranteed to be accurate or complete. All rates and terms listed are subject to change without notice. </li></ul><ul><li>The information contained here is for general information purposes. This presentation is not, nor should it be, construed as legal, investment, or tax advice. </li></ul><ul><li>Particular investment or trading strategies should be evaluated relative to each individual’s objectives. Consult your own legal, investment or tax advisor prior to implementation. Neither The Toronto-Dominion Bank nor its subsidiaries are liable for any errors or omissions in this information or any loss or damage suffered. </li></ul><ul><li>TD Waterhouse and TD Bank Financial Group are trade-marks of The Toronto-Dominion Bank. </li></ul>
  28. 28. Thank you! We’re here to help!

Editor's Notes

  • Good morning/afternoon/evening everyone and welcome to “Navigating Your Future, new retirement realities”. Introduction: For those of you that I may not have had the opportunity to meet yet, my name is ___________, I have ____________ years of experience in financial services/ Wealth Management, and I am a(n) ___________(title) with _____________ (insert business) at TD Waterhouse. Our goal for the next hour is to help you achieve peace of mind that comes with knowing that you are financially prepared for your future. Joining me tonight are a number of my colleagues, an exceptional team of wealth management professionals who bring a variety of expertise, ranging from Estate and Trust Planning, Investment Management, Banking, Insurance, Credit, Charitable Giving, Tax, Investment Strategy, as well as Financial Planning. Our collective goal is to add value where we can, either through discussions tonight; answering any specific questions you may have, either during or at the end of the seminar, or meeting with you and your family on an individual basis, depending on your preference. Introduce Wealth Partners in attendance Provide name and business Ask partners to stand up to be identified Introduce Other Partners in attendance On behalf or myself and my partners, I’d like to thank you all for being our guests here today.