Great Lakes Investment Group
January 08, 2024
Money Financial literacyGetting Your Investments In Order For Retirement
Every year, another group of clients come to grips with their impending retirement. This is a time of mixed emotions for many people; the sheer number of changes that retirement sparks is staggering. From an investment perspective, covering some of the bases and reviewing your situation before you make a significant decision is wise.
Today, we'll focus on the assets many of our clients accumulate through their employers.
- Pension Plans
- Locked-In accounts
- Restricted Stock Awards/Restricted Stock Units (RSA/RSU)
If you've worked for a company over the years, there is a high likelihood that you will have accumulated assets in one or more of the account types mentioned above. Your Great Lakes Investment Group Financial Blueprint has always accounted for these assets, but as retirement approaches, incorporating strategies for these assets post-employment takes a higher priority.
In Canada, we see two main pension plans.
Defined Contribution Pension Plan – Over the years, you know how much you pay into the plan but do not know how much you get when you retire, as it depends on the accumulated size.
Defined Benefit Pension Plan – Through employment, your employer promises to pay a regular income after you retire. The amount of income is typically calculated based on your salary and the number of years you contributed to the plan.
The same type of company that offers a pension plan will often have some employer-sponsored Group Registered Retirement Savings Plan (RRSP) as well. In this case, you will both contribute to the plan.
Nothing needs to be done for the Defined Contribution Pension Plan outside of incorporating the final numbers into your Financial Blueprint. You will need to make a few decisions if you have a Defined Benefit Pension Plan and or a Group RRSP.
With a Defined Contribution Pension Plan, you will have some options when you retire. To:
- Place the funds into an annuity.
- Transfer the funds into a locked-in retirement savings plan or a locked-in retirement income fund.
- Or a combination of the two choices
You may have had some choice with how your Defined Contribution Pension Plan was invested while you were working, so selecting your investment options may be familiar to you.
If your employer only offered a Group RRSP, you also would have had to make the investment decision while the plan was in effect.
In either case, the life milestone of going from employment to retirement is meaningful and will significantly impact your financial affairs. At Great Lakes Investment Group, we review current investment goals and risk tolerance before making investment decisions.
Further to the broader discussions on pension plan savings, we often have clients who received Restricted Stock Units (RSU) or Restricted Stock Awards (RSA) as part of their compensation packages that may require some important decisions.
• A RSU is a grant valued in company stock, but you do not get the shares until the restrictions lapse or vest.
• A RSA grants you the right to buy shares at fair market value at no cost or a discount.
In many cases a full vesting of RSU's accompanies retirement. If this is the case for your situation, consider whether or not you wish to maintain those shares or liquidate some of them and invest the proceeds in other securities. At a minimum, we will reevaluate your asset mix by adding the new shares to ensure you are appropriately diversified.
In the case of an RSA, you can take advantage of the purchase price to add shares to your portfolio or flip them and recoup the profit from the differential.
Whichever scenario applies to your situation, retirement is a milestone that triggers a series of financial changes. At Great Lakes Investment Group, we take this seriously and have spent significant planning over the years to ensure your needs and goals are taken care of when retirement comes.
And if you're not one of our valued clients and are considering retirement, we invite you to connect with a team member, and we'll review your options and examine how various courses of action might positively impact your financial goals, today and tomorrow.
CIBC Private Wealth” consists of services provided by CIBC and certain of its subsidiaries through CIBC Private Banking; CIBC Private Investment Counsel, a division of CIBC Asset Management Inc. (“CAM”); CIBC Trust Corporation; and CIBC Wood Gundy, a division of CIBC World Markets Inc. (“WMI”). CIBC Private Banking provides solutions from CIBC Investor Services Inc. (“ISI”), CAM and credit products. CIBC Private Wealth services are available to qualified individuals. Insurance services are only available through CIBC Wood Gundy Financial Services Inc. In Quebec, insurance services are only available through CIBC Wood Gundy Financial Services (Quebec) Inc. The CIBC logo and “CIBC Private Wealth” are trademarks of CIBC, used under license. “Wood Gundy” is a registered trademark of CIBC World Markets Inc.
Clients are advised to seek advice regarding their particular circumstances from their personal tax and legal advisors.
Given the complexities involved, specialized tax and pension advice must be sought to ensure an Individual Pension Plan (IPP) is appropriate to individual situations. An IPP strategy must be considered within the context of a comprehensive financial and estate plan.
Clients are advised to seek advice regarding their particular circumstances from their personal tax and legal advisors