Older clients may face a number of challenges

The clients you have worked with for many years will have their finances in order as they move into retirement. But new clients who come to you may need help in making a successful transition from their accumulation years to their de-accumulation years.

“About 75% of our new clients are aged 55 and older, and it’s the first time many of them have worked with a financial planner,” said Jason Schella, BMO Financial Group’s Moncton, N.B.-based vice president, financial planning, for New Brunswick and Prince Edward Island. “There are a number of challenges people in this age group face, and this may have prompted them to seek your help.”

And one of the biggest challenges older Canadians now face is generating sufficient retirement income, said Mike Englert, who teaches the financial component of the Canadian Initiative for Elder Planning Studies’ program leading to the elder planning counselor designation. “Low returns on guaranteed investment certificates are forcing older people into riskier investments, but equity markets have been terrible in recent years and nothing suggests to me that they’ll get better soon,” Englert said.

Retiring with debt

Two-thirds of Canadians are now entering retirement without workplace pension plans, he added. And more Canadians are retiring with debt.

“The baby boomers have had higher lifestyle expectations than previous generations,” Schella said. “It’s not uncommon for families to have had two travel vacations every year.”

The boomers have been inept consumers, Englert added. “They’ve been buying a lot of junk and overpaying for it. They believed they were entitled to do this.”

Death of a spouse

Your 55-plus clients may face other unforeseen challenges, all of which have financial ramifications. “Adult children may return home for help, sometimes with children of their own, and your clients may find themselves raising another generation,” Schella noted. “The death of a spouse may mean a reduction in income, and if the surviving spouse wasn’t involved in the family finances, he or she will certainly need help. And illness, physical or mental, of either or both spouses will mean coping with health-care costs.”

The first step an advisor needs to take, he said, is to review the client’s assets and liabilities, and create a financial plan tailored to his individual needs. “At this point, you will need to open a fulsome discussion about what the client wants to do in retirement, where he wants to live and what his social network will be when he’s no longer working.”Common side-effects: Back pain Dizziness Rashes Facial flushing Diarrhea Nausea Upset stomach Muscle pain Serious side-effects: Chest pain Ringing in ears Problem while breathing Change or loss in vision or hearing it is sildenafil soft important to immediately consult a qualified doctor in order to stay healthy. Having a healthy baby is all parents’ cheap super cialis wish. These cheap levitra http://cute-n-tiny.com/cute-animals/wold-and-white-tiger-pals/ products can help them enjoy ecstatic orgasms by bringing back the elasticity of their vaginas without any major side effects. One has to depend over remedial pills for the treatment of low sperm cost of levitra always in stock count and infertility.

Clarify expectations

The conversation about lifestyle will clarify the client’s expectations for the coming years and give the advisor a handle on how much it will cost to support his retirement lifestyle. “It may be necessary to enlist the help of an advisor who is a specialist on the investment front,” Schella said. “There are a number of new solutions out there that may be suitable for your client’s needs, such as a T6 mutual fund that provides a tax-efficient income stream, and fixed cash-flow solutions that pay a fixed income for a set period of time.”

Government benefits will probably be an important part of the client’s income stream and must be included in the review of his assets. “A couple collecting the maximum Canada or Quebec Pension Plan and Old Age Security benefits will see a combined income of about $36,000,” Englert noted. “And there’s also the non-taxable Guaranteed Income Supplement for lower-income Canadians. Notice that I said, ‘lower income,’ not ‘poor Canadians.’ As the rules now stand, there is no means test for GIS eligibility. The applicant must be a Canadian resident, receiving basic OAS benefits and his income must be lower than the maximum allowed income levels. [For current income ceilings, see http://bit.ly/OASpa.]

“So if your client is no longer working, has no company pension plan and his assets – which may be sizeable – aren’t currently throwing off any income, he may be eligible to collect GIS. And his spouse may be eligible for the spousal allowance. If they are eligible, they should apply for these supplemental benefits. It’s just smart financial planning.”

Retirement dreams

Schella said some clients have been savers all their lives and their advisor should commend them on the great job they’ve done and encourage them to spend a bit. “They should take that trip and visit the places they’ve always wanted to see.”

Some clients, however, will have to readjust their retirement dreams. “They may have to learn to become better consumers, and tone down their lifestyle and their expectations,” Englert said. “They may have to work longer and sock away what they’re earning. And if their life expectancies permit, I’d encourage them to delay taking their government benefits as long as possible.

“If the client delays collecting CPP benefits until age 70,” he noted, “he will see a 42% bump-up in the payout over what he would get if he started collecting them at age 65. So instead of collecting $1,000 a month, he would receive $1,420 a month.” Canadians can now also delay their OAS pensions to age 70, and those who defer them for the full five years will see a 36% increase in the monthly benefit.”