Smart Risk Magazine Spring 2018 | Page 30

30 WORK-OPTIONAL LIFE SPRING 2 0 1 8 BUILD WEALTH FOR RETIREMENT TO ENJOY A WORK- OPTIONAL LIFE BY: Maili Wong, CFA, Smart Risk Investing FOR MOST of us, work is a necessity rather than a choice. In an ideal world, it would be great to have the option of not working as we grow older, and there are steps you can take to try to make this goal a reality. In this scenario, your income would be generated from your investments – a wisely apportioned, closely monitored portfolio of assets that could include stocks, bonds, real estate, private businesses or other interests. Savvy investors will start the process early, as it takes time to amass a portfolio large and stable enough to withstand a long retirement period – especially during the inevitable market downturns that will occur. Here is how I delineate the four stages of saving for retirement and appropriate action steps with my own clients. You may be able to relate these recommendations to your own situation and research best options to building your own savings portfolio. STAGE 1. WANTING IT ALL. With 20 to 30 years before retirement, it’s typical to have multiple goals, including specific career ambitions, paying down a mortgage and saving for your kids’ education. Despite the multiple demands on your cash flow at this stage, it’s still very important not to neglect the need for retirement savings. A good first step is to develop a financial plan that projects the impact of current saving and spending habits on potential retirement goals. Try to get the ball rolling at a young age, preferably via automatic monthly contributions to an investment portfolio. Another good strategy may be to purchase insurance against serious illness or disability, to build a financial safety net. WWW.SMARTRISKINVESTING.COM STAGE 2. TIME IS RUNNING OUT. When you are about 3 to 10 years away from retirement, you may start thinking more seriously about the amount of savings you will need to maintain an active lifestyle. This is a good time to step up your regular contribution amounts if you haven’t already done so, and review the status of your existing insurance policies, wills and estate plans. It also might make sense to find a trusted investment advisor to help oversee and guide your planning. STAGE 3. WORK-OPTIONAL LIVING. At retirement, you can begin to experience work as a choice, rather than a necessity. Many in this category are active travellers who remain engaged in numerous other activities. To sustain this lifestyle, it is ideal to work with a professional who can help balance your cash flow needs against the need to preserve capital. If it is necessary to cut expenses, your advisor can help you determine the right strategy. STAGE 4. GIVING BACK. This phase is often characterized by self-reflection and decisions about leaving a legacy for your family and others. It is important to consolidate your assets at this time to simplify the process of succession and estate planning. Keep your financial documents up-to-date in case of any potential loss in memory or function. Though the plan-ahead process may seem daunting, you will get the best results if you start early. For help in getting the ball rolling, see what savings options may be available through your employer or contact an experienced investment advisor or Certified Financial Planner (CFP).