We’re conditioned to think about our lives (not to mention financial planning) in stages. Our adolescent and early adult years are spent attending school and then maybe pursuing a post-secondary education. Between our twenties and forties, it’s often about building a career, a business or a family—maybe all three. Then it’s time for retirement and our golden years: golf, pickleball, travel and playing with the grandkids.
The problem is that while many entrepreneurs and professionals today are interested in a hard career stop at some point, pursuing some form of second career—which could include philanthropic activities or volunteering—also piques their interest. They’re builders of companies, problem solvers, service providers or product makers who are inspired by new ideas and interactions with their clients. Once more, these dynamic entrepreneurs and professionals have a great deal of insight and expertise they can offer to organizations and the next generation of leaders.
It’s not about retirement for them. It’s about financial freedom that enables them to pursue other career-related passions. Financial planning strategies need to reflect that very different outlook.
We need to recognize that traditional retirement planning involving generic financial solutions won’t serve these individuals’ unique needs. One example is investing in RRSPs to build savings and differ tax liability. While RRSPs are a useful savings tool, they can compromise control of capital and constrain liquidity. That’s a potential problem for dynamic, high net-worth business owners who might want to continue building wealth and exploring other business opportunities.
Here are three more things to consider when planning for your life transition (which we’d rather not call ‘retirement’):
Look for more (and better) strategic advice—You probably have more wealth and require more financial planning help than you think. Build your own advisory team consisting of an experienced wealth/portfolio manager, accountant, lawyer and insurance advisor that are in alignment and focused on delivering advice and direction proactively. At Bridgewell, for example, we act as your personal CFO, ensuring your team of advisors are in communication and developing coordinated tax or financial planning strategies that take you a step closer to achieving the financial well-being you’ve worked so long to achieve.
Look at alternatives—Develop a financial plan that considers your future goals (and assumes a lifespan into your nineties if you don’t have any acute or chronic medical conditions that might speed up that eventual end date) and embraces a broad scope of investment vehicles from real estate to public securities to private assets. Not all will make sense for your lifestyle and wealth-building goals, but the point is to think beyond traditional registered accounts and a portfolio built solely with equities, cash and fixed income products.
Don’t forget insurance—Take the time to look at more sophisticated wealth planning strategies with insurance as a lynchpin. Why? The many business owners who don’t pay themselves T4 income, for example, are unable to invest in registered savings tools such as RRSPs. If you fall into that category, you could use whole life policies to mitigate your tax burden, while creating future income. If those funds aren’t used in your lifetime, they can be passed on to the next generation in a tax-efficient manner. That’s just one way that insurance solutions can be used to shore up your post-career finances.
So, let’s stop talking about retirement and focus on how it should be viewed: as the next step in a long, prosperous life of financial wellness.
The Bridgewell team
For assistance with your wealth and financial planning needs, contact a member of our team today.