D Smith: Making the leap into the business world

There is a new investment book worth reading called Pensionize Your Nest Egg: How to Use Product Allocation to Create a Guaranteed Income for Life.

There is a new investment book worth reading called Pensionize Your Nest Egg: How to Use Product Allocation to Create a Guaranteed Income for Life.

It is written by Moshe A. Milevsky, an award winning teacher and author. He has published eight books and has co-authored this book with certified financial planner Alexandra Macqueen.

His latest book offers advice on how to plan for a financially successful retirement.

The authors have coined (and trademarked) the term “pensionize,” which means to convert some retirement income into a guaranteed income that lasts a lifetime.

Whether you have a company pension or personal pension, this book is worth the read.

Defined benefit pensions were offered to the majority of employees in North America a few decades ago.

The income stream provided a lifetime of income in retirement, and provided a survivor pension for your spouse after death.

As many companies reduce operating costs, this type of DB pension is being eliminated.

The private sector typically provides a Defined Contribution (DC) pension, and this is invested in a tax-sheltered investment, and offers no promise of lifetime income.

The rest of the population with no employer pension, are responsible for their own retirement.

You can pensionize your own individual retirement plan.

Take some of your financial assets, and convert them to an individual pension plan to pay you a guaranteed income stream for the rest of your life.

Canadians can use a financially engineered product to have a guaranteed lifetime income.  These are called guaranteed lifetime withdrawal benefit products.

These products provide guaranteed income.

They can also provide exposure to the stock market to protect against inflation.

This is very similar to pension plans of the past, and provide a guaranteed payout each year.

There are many life events that can wreck even the wealthiest of retirees retirement plans.

Many people outlive their retirement income.

In today’s low-interest rate environment, a RRIF is quickly depleted when the annual mandatory RRIF income increases each year.

An individual aged 75 must receive 7.85 per cent of the market value of their RRIF assets annually.

If that individual has GICs paying one or two per cent per year, they are decreasing their RRIF in excess of five per cent per year.

Other risks to contribute to retirement uncertainty are: a stock market decline, unplanned for personal inflation, health issues, unpredictable human longevity (none of us now when our time is up) or families in financial distress.

Ask a certified financial planner to provide guidance on how to properly diversify your portfolio, to maximize the upside potential, minimize downside risk, and to meet your retirement goals.

You can own your own personal pension plan with a guaranteed income steam to last your lifetime.

The website helpmysavingslast.ca willhelp identify your financial concerns.  Then give me a call to discuss life and retirement planning issues.

The opinions expressed are those of the author and may not necessarily reflect those of Manulife Securities Investment Services Inc.

 

Doreen Smith is a

certified financial planner with Capri Wealth Management and Manulife Securities Investment Services Inc. Doreen can be reached at 860-7144 ext. 114. The opinions

expressed are those of the author and may not

necessarily reflect those of Manulife Securities

Investment Services Inc.

 

 

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