Get help with your retirement
You’ve procrastinated this long — so chances are that getting on the right investment track, and staying on it, will require more than your best intentions. For Oxenbury, hooking up in 2006 with Katrine Sperling, her 45-year-old Edward Jones financial advisor in Vancouver, made all the difference. “Over the years I had contributed money here and there,” Oxenbury recalls. “She helped me consolidate them” into an appropriate mix of safer income-earning investments, and slightly riskier but potentially more profitable equity funds. While the average Canadian balanced mutual fund (a mix of income and equity investments) returned 8.9 per cent in 2006, since then Oxenbury’s RRSP has recorded a healthy annualized return just north of 13 per cent. Her advisor was the first to point out that Oxenbury won’t do that well every year; like any good financial planner, Sperling keeps her clients’ aspirations rooted in the realm of what’s truly achievable — and sometimes she has to practise tough love in counselling a client to scale back her retirement dreams because she’ll never be able to bankroll that lifestyle.
“There’s no point in me telling you that you need to put away $1,000 a month if that’s absolutely unrealistic for your budget,” says Sperling. “So then you have to come to an agreement about what is realistic. Could you put away $300 a month? If that’s much more maintainable, start with that, and then work with somebody who’s going to remind you that, okay, if we want to increase these goals, we need to be nudging up that monthly contribution by 10 per cent each time we chat, or quarterly, or something like that.”
The ins and outs of financial advice
Reliable financial advice doesn’t have to cost a lot. Many advisors don’t charge their clients a fee; instead, they’re paid commissions for the mutual funds they sell. Yes, there is the potential for an unsavoury character to load you up with mutual funds not because they’re right for you, but because they pay him well — so it is important to shop around for a planner you trust and feel comfortable with. Ask friends and family for recommendations, or find a short list of candidates, along with tips on how to grill them, through the profession’s national associations. For accredited advisors or planners in your area, try Advocis, The Financial Advisors Association of Canada or Financial Planners Standards Council.
Get a roof over your head
If you have a mortgage, chances are your retirement is already more secure than you think. Even if you’re still years away from owning it outright, your home is probably your largest asset — and, as Lovett-Reid points out, it’s one of the few you can sell without having to pay tax on the increase in value. The profit is 100 per cent yours to pocket or to pay for retirement living expenses. And in case you decide against downsizing, your home can still help you pump up your cash flow, by backing a home equity line of credit or reverse mortgage — a loan geared to seniors that doesn’t have to be repaid as long as you live in your home.
Following her divorce in 2001, Oxenbury bought a house in New Westminster, B.C. — a move Lovett-Reid believes more single women in their forties, fifties and even sixties should consider. Being prepared for retirement, she says, “doesn’t only mean saving inside an RSP. It’s about building up your net worth and your balance sheet. And I think real estate is a great place to start.”
Between the skyrocketing market value of her home, and her modestly swelling investment portfolio, the once-struggling Oxenbury feels pretty secure these days. “This year I actually achieved one of the savings goals I set for myself, and it was so cool,” she recalls. “Really, really emotional.
“I think I’m going to be all right.”
This article originally appeared in the February 2008 issue of More
