Q: This New Year I’m committed to reviewing my finances to ensure I’m doing everything I can, but I don’t know where to start. What advice can you give me?

A: As the old year gives way to the new, Canadians everywhere will be making promises to themselves. Big promises (I resolve to quit smoking) and not-so-big-promises (I resolve to call my aunt more often). But here’s one promise you should make and never break: “I resolve to be financially secure”.

Sometimes for the best, sometimes not – but inevitably, your life changes every year. That’s why it’s vital for achieving your life goals that you schedule a complete financial plan review in each 12-month period. And what better time than the new year.

Maybe your life hasn’t changed that much and your plan will need only minor tweaking. Maybe very significant changes have occurred – like a birth, a death, marriage, a move to a larger or smaller home or another large purchase. Maybe your life goals have changed – you’ve revised your planned retirement date or now want to phase into retirement, you’ve decided that your cottage would make an ideal retirement home, you intend to change your career path, or even start your own business. Maybe your investment return expectations or your tolerance for risk have changed. Maybe your tax-saving strategies or the ways in which you wish to leave your legacy for your heirs need revisiting.

Your financial plan is all about you and your life and an annual review is all about keeping your plan and your life on track so you can financially achieve all of your goals. Keep in mind that a complete financial plan should encompass many elements including your overall financial goals, your current and projected wealth, your current savings and budget requirements, and your registered and non-registered investments. Your review should include these seven key items:
Important life goals: Review your life goals. What has changed in your life since last year? What impact will those changes have on your financial plan? What adjustments should you make?
Investment portfolio: Review investment performance. Will your current investment strategy allow you to reach your goals within the time-frame you’ve set and within your risk tolerance? Do you need to make adjustments?
Cash and savings management: Review your cash management and savings history. Are you effectively meeting all your financial obligations? Do you need to revise your budget to accommodate such items as saving for your children’s education, a new house or cottage or other important life goals?
Lifestyle protection: Review your insurance protection. Do you need to obtain or enhance life, critical illness, disability, long term care and/or other insurance such as business or key person coverage?
Retirement planning: Do you need to make financial adjustments to ensure you will achieve your evolving retirement dreams?
Estate planning: Do you need to update your will or power of attorney?
Tax minimization strategies: Have you got the most effective strategies in place? Should you make adjustments?
If you don’t already have a written plan, your professional financial planner can help you develop a financial plan tailored specifically for you. Once you do have a written plan, it’s critical to regularly review it with your advisor and make the vital updates and adjustments to keep you on track to meeting your unique and ever-changing needs.

Lynn MacNeil, Pl.Fin. is a licensed Financial Planner with Investors Group Financial Services Inc., 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]

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