your financial

FALL 2016

security Freedom 55 Financial

After spending years working, you’re now closer to retirement and might be thinking about what that means to you. For most people, retirement is a time of mixed emotions. Along with the excitement of entering this new phase of life comes the nervousness stemming from the absence of a paycheque or steady income. As you approach retirement, you could be asking yourself:

• What will my spending look like in retirement?

• Will my money last?

• Do I need to worry about interest rates?

• How will market fluctuations affect my finances?

Do you have a plan in place for addressing these concerns? What if there was a way to help you feel confident about your finances in retirement?

Challenges in retirementIt is well-documented that Canadians are living longer. Statistics show retirees now need to plan for as long as 20 to 30 years in retirement.1 This makes it critical to secure a part of your nest egg in a way that can provide you with guaranteed income – similar to a paycheque – for the rest of your life.

Income annuities – a steady paycheque throughout your retirementFortunately, there is a way for you to receive guaranteed income for life – with an income annuity. Securing a part of your retirement nest egg with an income annuity can help you cover most of your basic living expenses throughout retirement. Then the other portion of your money can be invested in funds that have the potential to grow.

Income annuities – other perspectivesNot only are annuities a great way to receive a steady income throughout retirement, there are other factors that make income annuities even more attractive in retirement. They provide excellent value even in low interest rate environments, provide a predictable income regardless

of whether markets are up or down and can also help with estate transfer.

To find out more about how annuities work, exclusive annuity features and options and how income annuities may fit into your plans for retirement, speak to your financial security advisor. 1Issues related to increasing the “retirement age”, Canadian Institute of Actuaries, 2013.http://www.cia-ica.ca/docs/default-source/2013/213038e.pdf

Your guaranteed paycheque in retirementBuying an annuity can guarantee predictable income in retirement

Neil Smith, BA, B.Ed, CFPCertified Financial PlannerInvestment Representative

650 - 2010 11th Ave. Regina, SK S4P 0J3

Office: 306-586-0905, ext. 4246 Fax: 306-586-1282neil.smith@f55f.com

Proper money management is the key to becoming financially independent – it gives you the power to make the decisions that shape your life. Long-term thinking inspires you to create and follow a financial security plan that covers the next 40 years or more of your life.

If you haven’t sought professional help, chances are the only insurance you have is automobile or tenant insurance. But why bother? You’re single and don’t have kids. Surely, there’s no need for personal insurance. Or is there?

The importance of insuring your financial futureA solid financial security plan revolves around your current and future income. In devising such a plan, it’s important to think about your financial goals.

Getting your investments up and running at an early age is vital to growing wealth. A fast start could translate into owning your home years earlier.

Being prepared for unexpected health eventsAccidents happen and could prevent you from working for a few months or even years. A serious health issue could also put you on the sidelines. The probability of either situation happening to you in your lifetime is greater than you might think.

Individual disability and critical illness insurance can address those risks. If you are unable to work due to a serious illness or injury that is covered by your policy, disability insurance provides a stream of replacement income. If you suffer from a critical illness that’s covered by your policy, critical illness insurance pays a one-time lump sum amount when you need it most. Both types of insurance can help you continue to achieve your goals if something unexpected happens.

Some considerations about workplace insuranceMany of today’s young people know they face a different career path than their parents. Rather than working the same job for decades, the expectation is that people will switch employers every few years. While this isn’t necessarily a bad thing, it does mean you’ll likely lose the insurance provided by your employer each time you change jobs.

It’s also important to remember that the insurance you get through your workplace normally provides basic coverage and benefits from a set menu of options. As a result, unless you supplement your insurance coverage, it could be significantly short of your actual needs.

The advantage of buying insurance while you’re youngBuying personal insurance at a young age generally means you’re getting the lowest possible premiums, since

risks increase with age. Moreover, many policies allow you to renew your coverage without additional medical exams. Better still, coverage is guaranteed and, as long as premiums are paid as required, only you can cancel a policy

Why a permanent life insurance policy may be right for youWithout a spouse or kids, it may seem odd to purchase life insurance. However, there are compelling reasons to buy this kind of insurance coverage while you’re young and single.

Consider participating life insurance (one type of permanent life insurance). Yes, there’s a death benefit but also a guaranteed amount of money that grows inside the policy, combined with the investment performance of the participating account that can increase the value of your death benefit or help pay for future goals like an education fund, starting a new business or supplementing your retirement income. Keep in mind what you take out is subject to tax.

Permanent life insurance can play a central role in a financial security plan.

Keeping dependents in mindPeople are depending on you, even if you don’t have a spouse and kids. Take your parents – if they don’t have adequate finances, you and any siblings may eventually be responsible for their health and long-term care.

Here are some other instances where life insurance makes sense:

• You have a family member with special needs

• You took out a personal or business loan that a family member co-signed

• You want to leave a legacy to loved ones

• You want to bequeath a large donation to a charity or cause

Your decision to start and follow a financial security plan at an early age can help put you on track to financial independence. The right insurance will help ensure you stay on that path.

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Why do I need insurance if I am young and single?

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Why monthly saving is just as important as paying the billsEstablishing a savings routine is the foundation of successful financial security planning

Have you ever noticed that your wallet manages to empty out no matter how much you put in there? Sometimes it feels like $80 lasts no longer than $40.

It may explain why that emergency $20 is hidden in one of your shoes. You just can’t trust your wallet.

Okay, you’re the one actually emptying your wallet, but the point remains: we tend to spend whatever is in our pockets. This offers an important lesson for the way we handle all of our finances.

Perhaps the most well-known mantra in financial security planning is “paying yourself first.” It endures because it usually works. Another well-known guiding principle is that paying down debt trumps all. But this one isn’t quite so indisputable.

The value of creating a clear spending planPeople living paycheque to paycheque are bound to feel shackled by their financial responsibilities. Even some people making a decent living think they’ll never get ahead. They need a formal process that will slow things down and allow them to put money away.

Creating a simple budget or spending plan is the first step. Make sure to pay your bills on time – especially those that keep the lights on and the water running. Preauthorized

payments are a great solution. You also need to pay the rent, buy groceries, get to work and cover other day-to-day expenses.

If you have debt, you’ll need to devise a realistic schedule to repay it. But make sure you leave money aside for savings, even if it takes longer to repay your debts.

The importance of creating sensible spending habitsPutting money aside every month establishes a useful routine for efficiently managing your money. First, it creates an emergency fund for a rainy day. Second, treating your savings as a priority allows you to start a financial security plan, the key to getting money to work for you.

Carrying non-mortgage debt is not a good thing. But even more alarming is holding that debt while not having any savings. The debt may cost you more in interest charges than your savings account is generating, but that cash gives you much-needed options.

Why setting aside money is a no-brainerSetting aside a share of your monthly income needs to become routine. The best way to achieve this is by setting up automatic transfers. If your pay is deposited into a bank account, arrange to have a set amount transferred right away to a separate place – perhaps a high-interest savings account. Once you have an ample emergency reserve, transfer some to a longer-term investment.

Your workplace may also offer a seamless way to save. Some employers will put a fixed percentage of your gross pay into a group registered retirement savings plan (RRSP). You can also tell them to deduct a certain amount of your pay. These programs may even provide a bonus amount if your contributions hit a certain threshold.

Growing your savings with automatic transfersWhen your net pay increases, automatically boost the amount you transfer into savings. If you’re prudent, you may hit a point where your earnings allow you to increase your overall savings rate. The sooner you reach it, the faster your wealth can grow.

Flying under the radarBuilding savings isn’t easy – after all, there are plenty of fun things to spend your money on. But watching your savings grow can be motivating. And as long as the process is automatic, your wallet won’t notice the money is missing.

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Freedom 55 Financial and design are trademarks of London Life Insurance Company. Quadrus, Quadrus and design, Quadrus Investment Services Ltd. and design and Quadrus Group of Funds are trademarks of Quadrus Investment Services Ltd. Used with permission.

The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.

Add value to your business with a group benefits planRecruit and retain great employees

As a small business owner, you rely on your employees to help build your business. You have a great team behind you, so how do you protect your employees and build employee satisfaction and loyalty?

Offering wellness programs may be one way to retain employees, but over the long term may not be seen as important. Giving your employees a pay increase is another option, but is it the most cost-effective compensation method?

Consider a group benefits plan – an attractive overall compensation package. Health care and dental care benefits within your plan can help your employees bridge the gap between provincial health insurance and the coverage they need.

Group benefits are an investment in your company and employees’ well-being. At any time, employees may be dealing with mental health concerns, serious illnesses and physical ailments or finding the right work-life balance. These issues can lead to reduced productivity, growing absenteeism, disability, rising costs and workplace accidents. Group benefits are a key element to building employee satisfaction, improving morale and can help support the physical, mental and financial needs of your organization and your employees.

According to a 2015 Sanofi Canada Healthcare survey, 77 per cent of respondents say they would not move to a job that did not include health benefits .

Attract valuable employeesAn employee benefits plan can help you maintain a competitive position in the marketplace by helping you retain good employees and attract new ones.

A group benefits plan is an important part of your business’s financial security plan. Flexible and innovative benefits plans – featuring benefits like health care, dental care, disability and employee and family assistance plans – can be tailored to fit the specific needs of your company, whether it’s large or small.

Talk to a financial security advisor about the options available and how you can add value to your business.

http://www.sanofi.ca/l/ca/en/download.jsp?file=4E103D9D-8AC6-4965-9D4E-6D0D5E7A8400.pdf

Freedom 55 Financial

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