Protecting Your Retirement & Your Blended Family The Montrealer July 7, 2010 4879 Q: I am planning to retire early next year, but I’m concerned about whether or not I could run out of money during my retirement. How can I best ensure that I won’t outlive my money? A: Retirement can be an exciting yet scary time for many. When you stop adding to your savings and start withdrawing from them, the concern about out outliving your money often sets in. To ensure that you are well protected against that, you should go through the process of creating a written retirement plan with your financial planner. This would consider your current and future spending needs, the amount of income you will receive from pensions, taxes, as well as the amount of savings you have accumulated. Your retirement plan should also evaluate the effect inflation will have on your retirement. These days, as the economy lifts towards recovery, inflation is not a big deal, but according to many experts, you should be planning for an annual rate of 2%-4%. This means that your investment portfolio will need to achieve an annual rate of 2%-4% just to stay even. Consider which sources of your income are indexed for inflation. Consider which expenses will decrease over time and which will increase. And most importantly, consider to what degree your current investments offer inflation protection. Once you develop a written retirement plan with your financial planner, it should be reviewed and monitored during your retirement. Q: I am getting married this September. This is a second marriage for both of us. We both have young children, and separate finances. How can I make sure I protect myself & my children financially? A: Money is always one of the most challenging aspects of relationships, and that is especially true for blended families. Here are a few things to consider: Consider whether or not a domestic contract would be appropriate to protect assets brought into the new union. Get together and develop a new financial plan and budget that fits your new family. Redo your wills. Careful planning is needed to ensure that the children in your new union will benefit from your estate in the way you wish. Traditional planning techniques may not work because they could result in your children from a previous relationship receiving nothing if everything is transferred directly to your new spouse. Re-think your insurance, and update your beneficiaries Financial planning for a blended family can be complicated. Your financial planner, can help develop appropriate strategies that ensure your new family’s goals are met. Lynn MacNeil, Pl.Fin. is a licensed Financial Planner with Investors Group, specializing in retirement, tax & estate planning for retirees. This column is presented as a general source of information only and is not intended as a solicitation to buy or sell investments, nor is it intended to provide legal advice. For more information on this topic or on any other investment or financial matter, please contact Lynn MacNeil at (514) 693-3384 or [email protected]