Financial planning in your 50s and 60s

We’re going on a journey through the time period from your 50s and early 60s — a journey with a difference.

You may be accustomed to hearing descriptions of the various elements in a financial plan, and why you may need them. This journey looks at when rather than what.

But when should you bring each key financial element into your financial plan?

Your early to mid-50s

Most people in this life stage are still well into their careers. Retirement isn’t quite even on the radar. Here are some thoughts for this stage:

When to adjust your investment portfolio

When does the time horizon factor of approaching retirement dictate that you make your portfolio more conservative? Typically speaking, not now, not yet. Depending on your circumstances, you’ll be investing as usual, and that includes taking advantage of buying opportunities if markets are volatile.

Your kids’ Tax-Free Saving Account (TFSA)

Do you have children who just turned 18? Consider gifting them the $6,000 to kick off their TFSA. If your children are older than 18, you can shelter more of your family investment income and gains by contributing to their TFSA using their contribution room back to 2009.

Thoughts of estate planning with permanent life insurance

You’re too young to think about estate planning, right? Actually, the time is now for many investors. You may be in a position at this age to use universal life insurance or whole life insurance as an investment vehicle with the primary aim of turning your savings into a tax-free legacy for your heirs.

Time to consider critical illness insurance

You are at the age where you should be managing the financial side of the health risk of suffering a heart condition or developing cancer. If you don’t have critical illness insurance already, have a look at the premiums now, before the cost becomes prohibitive.

Long-term care insurance

If your parents ever require long-term care, would you be able to help through personal care or financial assistance? If so, consider purchasing long-term care insurance for your parents at this time. While earlier would have been more cost-effective, it’s still worth exploring.

Power of Attorney/Mandate (Quebec)

If you wait until you become incapable of managing your financial affairs or personal care, then it’s too late to get your power of attorney for property and health care. Now is not too early.

Your mid-50s until retirement

Now that retirement might be within sight, here is what to consider:

Your investment portfolio

It’s time to bring in the safety net. Generally, five to 10 years before your anticipated retirement is when you begin tilting the balance in your portfolio from growth to security.

Critical illness insurance

Critical illness insurance is not available after age 65. If you’re in your 50s, consider this coverage now before it becomes too expensive.

Long-term care insurance

Choosing when to purchase this coverage is largely about doing the math. You lock into lower premiums at earlier ages but pay for a longer period. We can show you the exact premiums at different ages. Many people find age 55 to 60 to be the sweet spot for purchasing coverage.

Estate planning

Now’s the time to discuss your estate with your family, to prevent future troubles among heirs. You should review your choice of executor and determine whether you wish to establish a trust – many people wait until retirement, but opportunities may be missed. Permanent life insurance can play a major role in estate planning, from transferring assets to heirs tax-free, to offsetting taxes payable on your estate. Premiums become expensive if you wait until retirement, and you risk becoming uninsurable.

Retirement planning

It’s wise to treat retirement planning as a project that includes considering where you’ll live, what you’ll do, and whether you’ll earn income. Retirement planning affects your financial plan and helps determine when you retire.

You have probably noticed that in many areas of financial planning in your 50s and 60s it’s advantageous to act or plan earlier rather than later. There are many needs to juggle – please involve us and make the journey that much smoother.