Why another book on retirement? Author Lynn Biscott, a CFP, R.F.P. and financial writer who has also written articles for The Insurance Journal, answers this question in the first chapter of her new book The Boomers Retire: A guide for Financial Advisors and their Clients.
Ms. Biscott explains that baby boomers' financial needs are shifting from the wealth accumulation stage, which emphasized financial products and strategies such as RRSPs, RESPs, paying down debt and using insurance to protect against financial disaster, to a new phase where they will soon be drawing down their assets. This "distribution stage" requires new financial product types and strategies.
Within the book, new products, such as guaranteed minimum withdrawal benefits (GMWBs) are explained and subjects such as the need for long-term insurance and tax effective approaches for using various income sources are also included.
While the financial aspect of retirement is of course a primary concern for advisors and their clients, the book also discusses quality of life issues. "Retirement isn't just about money," Ms. Biscott writes. "Quality of life becomes more important as we age, and issues such as where to live or how best to leave a legacy...come to the fore."
Life planning and financial planning "go hand-in-hand for the mature client," she says.
In her book, Ms. Biscott also extensively covers various sources of retirement income available to boomers. "Under the traditional retirement concept, most people earned full-time salaries until the day they retired and then lived off their pensions or retirement savings. Today's retirees, on the other hand, will have a blend of income streams from many different sources." She underlines that having various forms of income is a form of diversification. "We all know that we can reduce risk by holding various asset classes in the portfolio. Similarly we can reduce ‘income risk" by having a number of different sources of income."
Clients need to be reminded that even if their employee pension benefits seem low compared to a salary, other income sources such as government benefits may contribute more toward a comfortable retirement than they expect.
She provides extensive information about the Canada Pension Plan and Québec Pension Plans, such as the opportunity to phase into retirement with the QPP and pension sharing for couples through both the QPP and the CPP. Ms. Biscott also provides strategies for reducing the impact of clawbacks for Old Age Security (OAS) benefits.
Other sources of income such as RRSPs, RRIFs, employer-sponsored plans, Locked-In Retirement Accounts, stock option plans and much more are also covered in this section of the book.
What kinds of insurance products retiring should consider to protect themselves during travel, for long-term care needs, critical illness protection are also dealt with in detail, as are estate planning considerations such as Wills, Inter Vivos Trusts, supporting charitable causes and even passing on the family cottage.
The Boomers Retire is published by Thomson Carswell (www.carswell.com.) Lynn Biscott also has a website at www.fernwood.ca.