Senior Living: Is your financial plan in place?

Financial wealth is built on three foundations: income, insurance and investments.

Content of the article

So, have you created your financial planning resolutions for the New Year?

Advertising

Content of the article

They say that to build a good financial foundation, you need to have three main things in place to ensure your long-term stability and reach retirement debt-free and wealthy. Some have even coined it as a “three-legged stool” because without all three it would fall apart just as your financial plan would not be complete without the three foundations laid over your life.

So let’s build your stool for 2022 to make sure you’re ready for the future. The three foundations of financial wealth are: income, insurance and investments. Sounds simple enough, right? OK, let’s look at each one together:

Income

Well, everyone knows that you have to work to survive, that’s obvious. But, do you earn what you are worth or just what you think is good enough? Never underestimate your earning potential because the fastest way for you to build wealth is through your ability to earn more. You are the most important asset you have.

Advertising

Content of the article

Many people think there is a ceiling to their income, but that is a mistake. Successful people always believe they are worth more. If their employer doesn’t give them the pay they feel they deserve or the promotions they want over time, they quit and move to another company that will.

Compared to your whole life, you only have a small window of time to earn your fortune and build a career, so do it. If you’re unhappy and feel like you’re worth more, make the changes you know you should.

Another part of income is getting part of your take home pay to start working for you. Essentially, you want to pay yourself first. This can be done by contributing to an employee retirement or savings plan. If you’re lucky enough to have your employer match some of the contribution, then definitely take advantage of it.

Advertising

Content of the article

Assurance

In the past, when advising our clients on protecting their future, we always used the acronym WILT, which stands for Wills, Income Protection, Life Insurance and Tax Planning. You need a will to ensure your estate is divided as you wish and all minor children are taken care of.

Income protection is often overlooked and considered too expensive by most people who often feel they have sufficient disability insurance with their employer. Most people just focus on life insurance, but it’s important to remember that most accidents don’t result in death and you’re more likely to be seriously injured or disabled and unable to carry on. to work.

Tax planning is the last element of asset protection. Insurance is a great tool for paying the capital gains tax that your estate will have to pay when you die. Or if you are a business owner, it provides an investment tool with benefits that are protected from creditors. When you’re young, you should always consider buying a participating whole life policy that grows over time and has a cash value you can access when you retire.

Advertising

Content of the article

Investments

The last leg of the stool is that of investments. This may include investing in traditional tax incentive products like RRSPs, TFSAs or even non-registered accounts. If you prefer, you can stay completely off the stock market and invest in real estate, principal residence and/or rental. Money monetization is the key to wealth creation.

You will never be able to earn and save enough in your lifetime and if you could it would be beaten by the cost of inflation. This is why you need to invest in assets that will appreciate and grow over time.

Debt is inevitable when investing, but you should always have a plan in place, which is reviewed annually, to eliminate it in retirement. No one should ever retire with debt.

Advertising

Content of the article

Investing can also mean investing in yourself to improve your future prospects and increase your income. Remember, it’s impractical to think that once you graduate you can stop learning.

Unfortunately, there is always someone else who has gone a little further to improve themselves and will land the job or position you wanted. School debt is a reality for many, even for people in their 40s, many of whom are now realizing that they really want to get the most out of their careers, to prepare for their 50s and 60s.

Never be afraid to step back a little so you can leap forward. Build your three-legged stool and guarantee that you will retire debt-free and wealthy.

— Christine Ibbotson has written four books on finance, including the best-selling How to Retire Debt Free & Wealthy. [email protected]

Advertising

comments

Postmedia is committed to maintaining a lively yet civil discussion forum and encourages all readers to share their views on our articles. Comments can take up to an hour to be moderated before appearing on the site. We ask that you keep your comments relevant and respectful. We have enabled email notifications. You will now receive an email if you receive a reply to your comment, if there is an update to a comment thread you follow, or if a user follows you comments. See our Community Guidelines for more information and details on how to adjust your email settings.