A comfortable retirement won’t happen by accident. It requires an active decision from the potential retiree to seek expert advice and evaluate their financial standing. But what does that look like?
To better understand the process of saving for sustainability, NewRetirement spoke with Benoit Poliquin. Benoit is the Lead Portfolio Manager and President at Exponent Investment Management.
What kind of people most commonly seek financial advice where saving for retirement is concerned?
All of our clients are known in the industry as High Net Worth Clients. They are usually business owners, professionals, and diligent savers or have inherited their wealth. They all share the common goal of protecting their lifestyle.
Lifestyle is really derived from income … not assets. This means that contrary to our industry, which is focused on growing assets, we focus on the growth of not only assets but income from investments. This income is what funds our lifestyle.
What are 5 things that every person should know about financial planning for retirement?
1. Understand that everyone has an interest. Your bank, your banker, your adviser, your accountant, and your lawyer will all try and take control by ensuring that your interests are aligned with the interests of the professionals you hire. Make sure you hire an adviser, not a salesperson. That might be the biggest challenge.
2. Retirement planning is essentially an inventory of your income sources and is contrasted against the lifestyle budget you have established.
3. If you don’t have an idea of your lifestyle needs from a funding perspective, make that your number one priority. Also, understand that it will change with time. That is normal and is to be expected.
4. Simple is best. Our industry likes to overcomplicate a very simple concept in hope of securing long term employment. Keep it simple.
5. Hire the best help you can find. While we do this all day (every day), this is your first and only stab at retirement planning. We have gone to school to learn the science of finance, apprenticed with those that came before us, and continuously increased our knowledge. Most importantly, it is our passion.
More people than ever seem to live paycheck to paycheck. How can they (realistically) plan their finances in a way that will benefit them later in life?
Everyone works hard. Most if not all of us feel that we are underpaid and “deserve” to enjoy the finer things in life. The paycheck to paycheck conundrum is based on the idea that we confuse our needs and wants. It is an emotional state.
Saving is about delaying consumption today and investing those savings so
that you can consume tomorrow (retirement). If you do not save, you do not get to consumer later. It’s simple. The details of this could make for a great book. The concept is really all about needs versus wants.
What resources might you recommend to those considering retirement planning and what advice might you give them to start?
The first step is to understand the concept of the time value of money. This is a very basic concept that you can Google or look up on YouTube. All financial transactions rest upon this concept.
Is social security enough? How are the successfully retired supplementing their social security income?
I have seen some lead the retirement lifestyle they wish on very little, but government benefits are usually not enough because most people’s expenses exceed their benefits. With the aging population and higher life expectancies, I do not think these programs were intended to be the sole source of retirement income.
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