The 3 Legged Stool – A Broken Model

The 3 Legged Stool Of The Past.

Retirees of the past often enjoyed a combination of a company pension, government pension, and personal savings. But with the traditional model for retirement becoming a thing of the past, does it not make sense to start looking into retirement strategies based on personal responsibility? I know that last word “responsibility” might scare some, but the fact is there are many benefits in creating a financial plan tailored right to you.

With Private savings, you choose how much you save and invest. A common argument for government plans is that we as Canadians are not saving enough and they want the government to make you save more. And I actually agree with the first part… We aren’t saving enough. But what was found was that for every dollar CPP increased, private savings decreased about the same. So are we saving any extra with this plan? No, in fact we are just saving differently.

Why Build Your Private Savings?

Private savings offer more flexibility in choice and give you the option to tailor a plan that is right for you. You are able to pull money out for a down payment on a home, to upgrade your education, and if the inevitable happens you are able to transfer the money to beneficiaries if you were to pass away. And that isn’t always the case with government pension plans. Family Emergencies, Illness, injury, job loss – these are some other examples where personal savings will be beneficial. Now we obviously wouldn’t want you to be draining your retirement nest egg, but the point is that you have options with personal savings.

What about for the entrepreneurs? Let’s say you have a 5 year plan where you want to be setting aside and building for an idea or business that you can’t wait to move forward with. Having a personal financial plan tailored for you is exactly what you need. Maybe you hold all of your retirement funds in segregated funds, which offer creditor protection. And you put your startup funds in something conservative to retain value, but also give some growth. Now that is just one example, and you would want to sit down with your financial broker to get an idea of a plan that is best for you. But the exciting thing about this, is that we have the options in front of us.

For the families, you might want to create a travel fund. Where instead of racking up your 20% credit card debt, you have built enough to go on a trip every single year just through your personal investment plan. And the beautiful thing about that, is when you come home from your relaxing trip you don’t have the burden of your trips debt hanging over top of you.

It’s About More Then Growing Old.

The idea of retirement shouldn’t be about growing old… it should be about building your financial independence. Build it to a point where you can stop going to a job you don’t love and start your own business, maybe about something that you are passionate about. To build it to a point where you can go travel the world with your family. Build it to the point where you no longer have the stresses of debt hanging over your head.

Why Should You Start Today?

Life isn’t all about money, but it’s sure not about struggling to put food food on the table or pay off creditors. Financial independence doesn’t postulate greed. Financial independence is a reality that everyone can achieve. It gives you the resources to do what you are passionate about without having to stress about your own financial situation. Whether that is, starting your own business, donating to a charity every year, education, traveling the world, spending more time with family… this list could go on for ever. But only if you start today…

My door is always open to anyone wanting to learn a little bit more about how money and finance works.

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