Money management can be hard – at any age. If you have arrived at fifty-something with little or no council on financial matters, managing your money can feel like a quite overwhelming proposition. Of course, the fact that you have money to manage is a large step in the right direction, and can be parlayed into a foundation for a relatively comfortable financial future.
According to Ms. Nancy Stevens, AVP, Senior Private Banker in the Private Banking department at Clarien Bank Limited, it’s never too late to start thinking about your financial future.
“One of our favourite statements when looking at investing is, ‘Time is your friend.’ Many of us have attended a financial planning seminar at some point, and been told about compounding interest. This is how it works: let’s say you invest your money on a cup of coffee (which costs roughly $5) every day between the ages of 25 and 65 years-old, how much will you have? The answer, using a conservative return rate of 6% is over $300,000.
“However, for most of us, we have had other commitments – mortgages, school fees etc. What if you haven’t been as dedicated to regular contributions during your 20s, 30s, and 40s? It is never too late to start. The key is to contribute regularly, find a trusted financial advisor, and block out the noise. Especially in volatile times, it is important to minimize the emotional side and focus on your long-term retirement goals over the next 15-20 years.”
Of course, retirement is a looming factor for every worker once they enter their fifties. Certified Financial Planner (CFP), and Forbes contributor, David Rae raises some very pertinent questions that every fifty-something worker should be asking themselves:
“Now is the time to take stock of where you are in life and where you want to be in the future. When would you like to retire? (Some of you will answer tomorrow, while a few of you may be planning to work forever). More importantly, it is time to review your progress towards your dream retirement. Are you on track for financial freedom? Or do you need to make drastic lifestyle changes now to make working later in life a choice instead of a must?
“It may feel like retirement is still years away, but it will be here before you know it. Did you ever really think you’d be 50? Between now and when you retire, the time is not that long when you realize your retirement savings will most likely need to last 30 years or more.” (www.forbes.com, 2022)
As I said, financial late bloomers have a lot of – potentially – very daunting things to think about. Ms. Stevens and her team at Clarien offer strong advice.
“If you haven’t started yet – sit down and outline your budget, then try to predict future expenses upon retirement. Perhaps, you no longer have to pay your children’s school fees once you reach your 50s, but you need to start budgeting for rising health care costs that will impact you as you get older. Working backwards, you can then determine what your monthly expenses will be. This might be a good time to also consider additional income streams, such as a part time job doing something you enjoy or love, or perhaps even downsizing and renting out your residence to secure additional income.”
Additional revenue streams are a good idea at any age, and there are countless opportunities for willing workers online; so, getting more familiar with technology can be a huge part of financial planning in 2022.
Ms. Stevens continues with a great option for prospective clients who want to take action:
“I am also a big fan of the ‘rainy day’ fund. Depending on the individual, this fund allows you to save anywhere from three to six months of salary. You never know when you might have an unexpected medical cost, or home repair pop up. To gain some interest on this, you could use a short-term CD (certificate of deposit), which is an account that allows you to save money at a fixed interest rate for a fixed amount of time. This way, these funds are also separated from your day-to-day account.”
Another feature of financial planning is investing. Investing is definitely something to be studied. The stories of young millionaires and Warren Buffet types are not common, and investing can be something that some people simply won’t succeed at alone; expert guidance is recommended!
“You wouldn’t give yourself a root canal — I would hope you would use a reputable dentist. The same principal applies to investing. We need support from qualified experts so we can save and invest our money for the future, both wisely and confidently. Clarien Bank offers a seasoned team of local investment managers who are ready to help clients meet their retirement goals.
“Research has shown that the average self-directed investor returns are 3.6% over the last 20 years, whereas, with a diversified portfolio (60% equity – 40% fixed income) average returns are 7.4%. (JP Morgan Asset Management US 4Q2022)”
There are some complicated things to consider when thinking about financial planning. Talking to a CFP just makes sense. Study, read, find out what investing is all about – get acquainted with YouTube and other places where educational videos are readily available.
Talk to your preferred local bank, or insurance company, to see what they offer to clients interested in starting a personal financial plan. Of course, going to see Ms. Stevens and her team at Clarien Bank is always a fantastic option!
“It is never too late to start. Start saving for that rainy day fund and take an additional step by consulting a financial advisor to get their advice and input. At Clarien, our underlying aim is to help clients better navigate their financial future. If you are looking for more information on how you can get started, call 294-2565 or email: [email protected].”
Wherever you go, go somewhere – your financial future will certainly be better for it.