2 - 6.5 Other Planning Factors Among the other factors which must be taken into consideration are: At what age does the elder want to retire? What is the elder’s current net worth? What is the elder's current budget? What is the present income flow? Can the elder save money? What - if any - family obligations exist? 2 7 ELDER SPECIFIC – The good news is that Canadians are living a lot longer. Unfortunately this is also the bad news. Historically the biggest financial threat that Canadians faced was "dying too soon." Today, however, the greatest risk to Canadians might very well be "living too long." In short, people are retiring earlier and living longer. In order to manage, retirees either have to set aside more money, or ensure that the money that they do have is working more efficiently. 2 - 7.1 Cautious Investors Past history and investment logic clearly dictate that most long-term investors should own equity investments (i.e., common stocks, mutual funds, etc.). And yet, most elder investors still maintain a high percentage of their money in fixed income assets like GICs, term deposits and government savings bonds. There are a number of reasons for this phenomenon. Most savers, for example, do not understand that they are assuming risk. The major long-term risk they face is the loss of purchasing power (inflation), not long-term market loss. Older investors also tend to fear capital loss and have little understanding of the benefit of asset allocation and diversification and the more competitive long-term returns available from non-guaranteed investments. The fact that many older investors have a strong relationship with a bank has also tended to keep them in safe guaranteed investments. Until quite recently, banks had little incentive or inclination to recommend securities or funds to their customers - since securities were unavailable from the bank. Recommending securities involved sending money to the bank's competitors. This was also true in the insurance industry. Representatives met client needs primarily through the sale of life, annuity, disability, and other types of insurance products. Historically equity investments were not a part of the mix. Times have, however, changed. Both banks and insurance companies are now major distributors of more aggressive financial products and services (either directly or through subsidiaries).
2 - 6.5 Other Planning Factors Among the other factors which must be taken into consideration are: At what age does the elder want to retire? What is the elder’s current net worth? What is the elder's current budget? What is the present income flow? Can the elder save money? What - if any - family obligations exist? 2 – 7 ELDER SPECIFIC The good news is that Canadians are living a lot longer. Unfortunately this is also the bad news. Historically the biggest financial threat that Canadians faced was "dying too soon." Today, however, the greatest risk to Canadians might very well be "living too long." In short, people are retiring earlier and living longer. In order to manage, retirees either have to set aside more money, or ensure that the money that they do have is working more efficiently. 2 - 7.1 Cautious Investors Past history and investment logic clearly dictate that most long-term investors should own equity investments (i.e., common stocks, mutual funds, etc.). And yet, most elder investors still maintain a high percentage of their money in fixed income assets like GICs, term deposits and government savings bonds. There are a number of reasons for this phenomenon. Most savers, for example, do not understand that they are assuming risk. The major long-term risk they face is the loss of purchasing power (inflation), not long-term market loss. Older investors also tend to fear capital loss and have little understanding of the benefit of asset allocation and diversification and the more competitive long-term returns available from non-guaranteed investments. The fact that many older investors have a strong relationship with a bank has also tended to keep them in safe guaranteed investments. Until quite recently, banks had little incentive or inclination to recommend securities or funds to their customers - since securities were unavailable from the bank. Recommending securities involved sending money to the bank's competitors. This was also true in the insurance industry. Representatives met client needs primarily through the sale of life, annuity, disability, and other types of insurance products. Historically equity investments were not a part of the mix. Times have, however, changed. Both banks and insurance companies are now major distributors of more aggressive financial products and services (either directly or through subsidiaries).
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