Murray Callaghan, Callaghan Wealth Management
Despondent they sat across my office desk. Eyes focused down. They had just returned from a company-sponsored retirement planning workshop.
The “expert” had informed the group that they each needed $1.5 million to replace their income in retirement. It’s a little bit like a MD starting the conversation with “YOU HAVE CANCER.” Whatever information follows is unlikely to register.
I explained that in retirement re-creating their requirement for cash flow is really the objective. Beyond RRSPs they had other assets to consider; company pensions, CPP, OAS and further insurance from a mortgage-free home. Monthly needs look a lot different when you aren’t paying mortgages, educating kids and with deductions at source for CPP, pensions and higher taxes.
I’m not much of a fan of rules of thumb, especially in financial planning. Ditto to those in our industry that prey on those using fear and greed to get clients to invest far beyond what is required or peddling complicated and expensive insurance products to those that don’t need them.
Today, the industry is evolving. Financial planning, the new buzzword. Reps return from training sessions with all the enlightenment of having spent the weekend with Tony Robbins or Wayne Dyer.
Make no mistake. There will be winners and losers. Both good and poor money habits follow into retirement. If you have a mortgage, take multiple trips a year and plan to retire at 58 you might want to get some idea of what’s required in advance.
Yes. The NUMBER is important. However, it is secondary to the detailed and ongoing discussions of the variables that make-up that number.
They don’t teach that on the weekends.
Murray Callaghan is a Certified Financial Planner with 15 years’ industry experience. He partners with external portfolio managers and insurance providers. He can be reached at 250 286 9968 or visit his website at www.crwealthmanagement.ca