What Can a Financial Plan Do for You?

Tawnya Hallman |

About 6 months ago we started using new financial planning software called Planworth. Since then, we've created about a dozen financial plans for clients. Some clients are retired, some are 5-10 years away from retirement and some are just starting out.  

Depending on age, a financial plan can provide useful information about buying or selling real estate, planning for a family, saving for retirement, spending in retirement and estate planning. The most important things a financial plan offers though, are solid answers to people's most common financial questions and peace of mind.

Common Personal Finance Questions

We get all kinds of questions from clients on a daily basis. Not surprisingly, we've recently been fielding a lot of questions around mortgage renewals and how to manage higher mortgage payments. There has also been many inquiring about GICs since the rates are at a generous 5.5% or more.  

Hands down though, our most common personal finance questions include ones like these: 

  • “I’m 80 years old and I want to know how much longer my money will last me”.
  • “If I need to move out of my home and into a retirement home, will I have enough?”
  • “Will I have anything left to leave to my children or grandchildren?”
  • “Can I afford to give away some of my money to my kids today?”
  • “How much more do we need to save in order to be able to afford to retire?”
  • “What will our income be in retirement based on our savings?”
  • “When can I retire?”
  • “Am I saving enough?”
  • “Can we afford to renovate our home without jeopardizing our retirement?”
  • “I will have a pension through work. Do I need to save more than that?”

A financial plan can help answer all these questions and more.

What is a Financial Plan?

Enter Data 

The process to create a financial plan is simple. First, we plug in your current income, pension details, savings, real estate, investments, debt, monthly expenses.  The software does the rest. 

Income Projections 

Planworth will make projections for the future value of investments and pension income, including CPP and OAS to figure out how much you can safely withdraw annually based on your current savings. We can also play around with the benefit of taking CPP after 65. 

Future Retirement Dreams 

It also considers future expenses you might be planning for like a home renovation, cottage purchase or major travel. These exercises allow you to dream big and provide an opportunity to make changes to current savings in order to meet future goals. 

Taxes & Estate Planning 

Lastly, a financial plan considers inflation and taxes, including how much your estate will owe. This gives us a chance to adjust spending and savings (like moving funds to a TFSA) to keep more money in your pocket. 

Your Financial Plan in Colour 

Once all the information is gathered, we'll be left with a colour-coded graph that shows us where your income will come from in retirement (I.e., pension, TFSA, RRIF, LIF). You will have a clear picture of whether you are on track to reach your target retirement date and desired income.  

The sooner you create a financial plan, the more time you have to make adjustments if needed. 

In many cases, clients are surprised to see that they’ve already reached their savings goals. While they might still need to work until 60 or 65, they can stop saving for retirement and spend disposable income on other things instead. 

Financial Plan = Peace of Mind

In all cases, there is one common theme we’ve heard from clients we've created a financial plan for so far: they felt so much better knowing where they stand financially.  

Not knowing the answers to many of the above questions can be stressful, whether we realize it or not. If any of the above questions have ever crossed your mind, it's time for you to get a financial plan made for you.

Frank Gasper has over 25 years of experience helping people with all the big personal finance tops: buying a home, downsizing, planning for a family, securing or renewing a mortgage, life insurance, education savings, managing an inheritance, RDSPs, estate planning and more.  You can book a free consultation right here.