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Planning for retirement is of utmost importance. Why? Well, let’s consider the following seven questions and the discussions that follow:

  1. Are you actively saving towards and planning for retirement?
  2. If you are depending only on your organization’s or a government’s pension plan, what happens to your retirement savings plan if in your mid 40s or 50s you want to change jobs?
  3. If you live for 30 years after you retire, will your retirement plan last as long as you?
  4. Will you be able to deal with medical expenses that may come later on in life?
  5. Have you put things in place to ensure that your estate is protected? Do you keep your deed, wills and other important documents in a secure place?
  6. Will you be ready when your income turns from salary to pension?
  7. Will you have to depend on your children or siblings to take care of your financial needs as you get older?

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Organization and government pension plans need to be supplemented if you wish to maintain your standard of living after retirement. The best time to start saving for retirement is in your early 20s or 30s. With the right plan, you will be entitled to significant tax savings and can retire with hundreds of thousands of dollars and even pass the million dollar mark. Even if you’re past that age, it’s still better to start now rather than burying your head in the sand and pretending it’s not going to happen.

If you haven’t as yet done so, you should set up an Individual Retirement Plan as soon as possible.
Example - Setting up for successful retirement:
Let’s say You’re 30 years old;
You put aside $300/month
Your plan is projected to earn 4% per annum
You want to retire at age 60
With such a plan, you would have contributed $108,000 by age 60 but accumulated $208,214.82. That’s the magic of compound interest! Of that amount, you will receive $52,053.71 in hand and $156,161.12 will be left to help supplement your pension over the rest of your life. The sooner you start the more you retire with so call us right now. No excuses.

Facing reality and planning the hard stuff
If you have dependents, close family or loved ones, you may want to ensure that in the event of illness, they know where to turn for coverage to take care of you and, in the event of death, they will be able to maintain their standard of living.

You should have:

  • Life Insurance with Critical illness so they can take care of you during illness or maintain their standard of living in the event of death.
  • Funeral protection plan to cover final expenses and ease the burden on your family during an already traumatic time
  • Credit Risk Insurance to automatically liquidate debt in the event of death if you have or are taking a loan. This is to ensure your estate will not be negatively affected.
  • Wills and Trusts so your estate will be divided in the way you would wish (no fights over property and assets!)

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Ensuring that major expenses are dealt with while still receiving a salary
Before you retire and while you are still receiving your full salary, you may want to consider buying a new car or fixing up your existing one so you go into retirement with a dependable vehicle. You may also wish to complete much needed home renovations or make over your home into a peaceful, relaxing space in preparation for retirement.

You should consider financing these expenses five to ten years before your planned retirement so you don’t have too many loan obligations when your monthly salary is replaced by a pension. Also, if you are a homeowner, you can use the equity in your home to secure financing for this purpose through Home Equity Loans (read on for an explanation of homeowner’s equity).

Ask for:

  • Home Renovation Loans
  • Car Loans
  • Consumer Loans for other expenses

Paying off debt before retirement
While some people may take on additional debt before going into retirement to buy cars or renovate homes, others prefer to ensure that all debts, mortgages, loans, credit cards, etc. are paid off well before retirement. Here is a technique to reduce your debt and free up your cash before retirement.

Reduce your debt:
Commit to paying off one loan or your credit card entirely. By this, we mean that you:

  • Sacrifice and pay extra to that loan monthly so you pay it off faster. You should choose either the debt with the highest interest rate as this is the most expensive debt you have, or, the one you can pay interest off
  • Set up a monthly recurring transfer via Digital Banking to pay off your credit card.

When that loan is paid off, you would no longer have to make that installment and would therefore have ‘freed up’ funds. Do not go on a spending spree with those funds. Instead:

  • Decide on the next debt you want to pay off
  • In addition to your normal installment on this debt, also apply the ‘freed up’ funds from the last loan you paid off.

You will therefore pay off this next debt well before its maturity date. Continue using the funds that become available after paying off each debt in this way and you’re on the road to being debt free.

Set up: recurring transfer via Digital Banking from your Salary Account to your Credit Card Account or Loan

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Safer investments for lump sums and cash influxes

When retired or approaching retirement, you may receive multiple large inflows of cash from pension plans, matured insurance policies or even the sale of a large home as you scale down and move into a smaller, less expensive home or apartment. Look for safer investments as you won’t want to risk losing your nest egg at this stage. Lump sums should be invested in such a way as to benefit you for the rest of your life.

Consider lower risk investments with options such as monthly interest payments to supplement your income/pension.

Ask for: Term Deposits and high interest yielding savings accounts

Safekeeping for important documents and cherished possessions

In addition to keeping your wealth safe, you may also want to safeguard important items and documents such as wills, the deed for your home or expensive jewelry so you can have peace of mind knowing that these items don’t get into the wrong hands. For a nominal fee, you can store these items in a bank safe deposit locker and limit access to only those you feel 100% comfortable with.

Insurance becomes increasingly expensive as you get older and, after a certain age, you may not be able to buy insurance at all. If you cannot buy into an insurance plan and you don't already have one in place, you need to start saving immediately for the possibility of illness and hospitalization.

  • Set up an Automatic Savings Plan to transfer a portion of your income/pension every month to a savings account that can only be accessed in the event of an emergency.
  • You may wish to have one trusted person as a joint signatory on the account so they can access the funds if necessary. However, we stress that you must think very carefully before selecting this person as this account is of utmost importance.
  • You should also request monthly statements and check them regularly to ensure that your balance is what it’s supposed to be.
  • If you are a homeowner, you can also use the equity in your home to secure financing for this purpose through Home Equity Loans

Ask for: Automatic Savings Plan to high interest yielding savings account and about our Home Equity Loans

Special packages with age related benefits:

Customers should be encouraged to take advantage of age related banking benefits such as free services, waivers on membership fees and preferred interest rates on select banking products. Once you retire, every penny counts so ensure that you ask your banker how you can access these options.

Make banking easy and convenient
This should be a relaxing and stress-free time. After facing the hustle and bustle for all your working years, why spend time in traffic and bank lines simply to check account balances, transfer funds, pay bills and do other basic transactions? With ATMs, telephone and internet banking (where available), banking can be quick, easy and convenient.

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Once you plan your retirement goals, let us make an appointment for you with our financial experts. They will consult with you to understand your specific needs and recommend a customized solution to help you protect your estate, manage your finances and achieve your objectives.

Good to know – homeowner’s equity
If you are a homeowner, you can also use the equity in your home to secure financing for:

  • Medical expenses
  • Home renovation
  • Education expenses (for kids, etc.)
What is the equity in your home?
Your home equity is the amount left after subtracting the unpaid debt balance(s) on the property (e.g. your mortgage balance) from the property’s current market value as assessed by a valuator.
- Current market value - $500,000
- Mortgage balance - $200,000
- Homeowner’s equity - $300,000
Your homeowner’s equity, therefore, increases as debts are paid off or the market value of the property appreciates.

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Planning ahead for retirement years (Including the things we don’t like to think about)

  • Set up an Annuity or deferred Tax Savings Plan to save for retirement.
  • Take out a Life Insurance Policy with Critical Illness Insurance to ensure ample health coverage and continued well being of your family.
  • Start a funeral protection plan to cover final expenses and ease the burden on your family in the event of death.
  • Set up a Term Life Insurance Policy to automatically liquidate your debt in the event of death.
Just before retirement
  • Ensure that home and car expenses (repairs, purchases, etc.) are dealt with while you are still receiving a salary.
  • Use the ‘Reduce Debt’ strategy to pay off debt before retirement.

Upon Retirement

  • Find safer investments such as Term Deposits or higher yielding bank savings accounts and investments for: Lump sum and retirement income; or Excess funds from selling home to buy smaller, less costly property.
  • Secure your most important documents and cherished possessions through the use of Safety Deposit Boxes.
  • Think about how you will deal with Medical Costs (including emergencies)
    - Existing Insurance Plans with critical illness and hospitalization;
    - Automatic Savings Plan to High Interest Yielding Investment
    -Home Equity Loans
  • Create more time for yourself by signing up for telephone banking, internet banking, and debit cards
  • Protect your estate and prepare your will
  • Set up an appointment with our experts for help with financial planning