Column: Is your money ready for your retirement?

I worked part-time in retail throughout my university years. I loved starting work an hour before the store opened to make sure everything was ready for the customers. We would stock the shelves, tidy the displays, and help make the store sparkle. We were ready for business!

Successful retailers know how to be ready for their customers who want a great shopping experience where they can shop for all their needs at a reasonable price. We often don’t realize all the hard work that goes on behind the scenes to get the store ready for opening.

Preparing for retirement is no different. We need to assure our finances are ready for our lifestyle and there are five different areas where we need to prepare.

A Plan

Tragically, approximately two-thirds of Canadians do not have a written financial plan! Without a plan, how can you know the chances of reaching all your financial goals? Just like you need to always monitor your dashboard when driving, you also need to monitor your financial dashboard. Do you have a dial for retirement, future purchases, education expenses, cash reserves and your legacy? How about a dial showing your overall financial condition?

Ready for Anything

Mike Tyson once said, “everyone has a plan until they get punched in the face!”

Have you “punch-tested” your plan to see if it will survive an untimely serious illness, accident, or death? Will your plan survive an extended downturn in the markets or an unexpected major expense?

Inflation

News flash – most everything in life will get more expensive over the years and the purchasing power of your money and your income could suffer without proper planning. Your financial plan and your investment portfolio must be structured to keep pace with inflation.

Evidence-Based Investing

Many people had time on their hands during the first part of the pandemic and tried their hand at investing directly into the stock market, beginning when most markets were down dramatically. Because a rising tide tends to float all ships, these investors had a great experience and kept on investing more, including very expensive stocks and unbelievably risky asset classes like cryptocurrency. Recent downward volatility exposed the risk side of the investing equation!

Are you reacting to the news, trying to time the markets, chasing past performance, and otherwise trying to control the uncontrollable? Or are you plugged into an investment philosophy that favours financial science over speculation and salesmanship?

Asset Allocation

Review the top-performing asset classes and the top-performing countries over the years and you will see random patterns that no one can predict. Rather than following misguided bloggers, talking heads or financial salespeople who often think they know how to somehow beat the market, why not embrace the market, and capture all its returns? If it’s good enough for major pension plans, it might work for you as well!

Do you have the right mix of equities, fixed income, and cash investments to both grow your wealth and survive an extended downturn?

A comprehensive financial plan will prepare your money for retirement. If you are busy pursuing the retirement goals that matter to you, you’ll probably want to consult the right financial guide for advice along the way.

Richard Vetter is a Certified Financial Planner and owner of WealthSmart Inc.