The Hidden Cost of Not Having a Financial Plan
The plan might show you that contributing more to an RESP and getting the grants is a better investment than an extra payment on your 3% mortgage. Or spending $100,000 on parent care could delay retirement by 18 months unless extra savings occur. Creating a cash flow plan inside the financial plan helps you make informed choices, understand the trade-offs, and prevent emotional mistakes.
Many people don’t understand what they will get from a financial plan because too often, financial planning is mixed up with or used interchangeably with investment management. These examples are how a Financial plan can benefit you, and the examples are focused on people in the 45-60 age group:
This age group wants retirement security, but they also want to help their kids and aging parents. They want balance without guilt. Your financial plan can show you concrete trade-offs. An example might be contributing an extra $25000 to an RESP and which delays retirement by 6 months, but skipping the contribution could burden the child with high student loans. The plan might show you that contributing more to an RESP and getting the grants is a better investment than an extra payment on your 3% mortgage. Or spending $100,000 on parent care could delay retirement by 18 months unless extra savings occur. Creating a cash flow plan inside the financial plan helps you make informed choices, understand the trade-offs, and prevent emotional mistakes.
These are typically your peak earnings years. A plan ensures you are capturing this opportunity. Creating strategic RRSP, Spousal RRSP, and TFSA contributions, corporate investment accounts(if self-employed), and pension optimization can save you thousands in taxes annually, turning more income into wealth.
Create clarity and confidence on when you can transition to retirement. Stop guessing! A comprehensive plan shows exactly how retirement-ready you are and your current trajectory. For example, you can retire at 63 with $75,000 in income or you can retire at 66 with $95,000. The precision transforms anxiety into actions and informed decisions.
Understanding how the timing of the Canada Pension Plan affects your income and how it can affect longevity risk and taxes. Delaying to age 60 is a 42% increase, and the decision should not be taken lightly.
Risk Management at Life's Peak. You have the most to protect and the most to lose. Comprehensive insurance reviews ensure your disability, critical illness, and life coverage match your current obligations. One unexpected health crisis shouldn't derail decades of careful planning; proper coverage protects everything you've built.
If you're considering selling the family home(downsizing at some point), a planner models the financial implications: reinvestment strategies and how the proceeds affect retirement income. They might reveal that downsizing could fund 5-10 extra years of travel or allow earlier retirement.
Get your will, powers of attorney, and beneficiary designations properly structured now. A planner can coordinate with estate lawyers to minimize probate fees and taxes, potentially saving your heirs thousands and preventing family conflicts when emotions are already high. Estate planning is a lot easier if it isn’t urgent.
Retirement planning is not just about the numbers. A planner can help you understand how having a purpose, a planned social life, and focusing on your health will help make you more content in retirement. Planning is most effective when it aligns with your values and vision of retirement.
All of the above can be addressed in a comprehensive financial plan. You can also choose to focus on one modality and build a plan to achieve that goal. Financial planning is more than just investing in a certain fund. Book an initial consultation today.