Start planning for the dream retirement today

If spending your golden years in a castle on a beach sounds outlandish, well, tell that to your clients.

According to a Bank of Montreal promotion, which asked 34,000 people where they’d like to retire, 25% of respondents said on a beach, while 16% wanted to live in a villa on a beach. One ambitious Canadian wanted to spend her retirement in a castle overlooking the ocean.

“Doing some of these things takes planning, and it also takes some clarity of what you want to accomplish,” says Kris Vikmanis, head of retirement market, BMO Financial Group.

While BMO learned that travelling the world was a retirement dream of 20% of those surveyed, what people actually plan to do in their post-work years wasn’t the point of the contest; getting clients to start thinking about what life in retirement might look like was.

“What this survey did was really get people to start thinking about, ‘If I want that dream, maybe I should think about doing something,’ ” says Vikmanis. “That was our objective with this promotion, to get people to start visualizing and to make more specific dreams.”

Robert Abboud, president of Orleans, Ont.-based Wealth Strategies, says getting clients to think about their retirement plans early is the only way they’ll achieve them when it comes time to quit work. “If we don’t write down our goals, don’t put them into writing, then they’re just wishes,” he says. “When you put something down in writing with the date and cost it becomes a goal.”

At BMO, advisors create a “life map” for their clients that helps people outline what they want to achieve through their working years and beyond. “The end result is a map that includes key milestones,” says Vikmanis. “Once people have a sense of that, they sit down with a financial advisor and talk through what does this mean for where I am now, what choices do I have, and how do I get started so it becomes easier to achieve these things?”

If clients develop a clear plan today, then spending a few months in a castle on the beach might not be such a crazy dream. “I bet anything, finding a castle on a beach wouldn’t be that out of range,” says Abboud, half-joking. “Let’s say it was even $10,000 a week. If the person wants to do that 10 years from now, you just have to save $1,000 a year. It’s all a matter of setting aside money with a lot of advance timing.”

Coming up with long-term plans has been a focal point of Abboud’s business. He’s often helping people budget for trips to China, India or other far-off places, but he’s also helping one person buy a ’68 Mustang, while another couple hopes to spend some of their retirement driving across Canada on Harleys.

“This has nothing to do with retirement,” says Abboud. “I separate things. There are goals, like China and Harleys, and there’s retirement.”

He considers retirement long-term savings that can’t be touched, while goals, even though they’ll be attained once the client stops working, are something entirely different. “That doesn’t count as part of a retirement plan,” Abboud explains. “When we look at the numbers, we don’t look at life goals. That money will be spent prior to or just after retirement. It’s like an RESP — we don’t add that into retirement assets.”

While clients should make their wishes known to their advisors, oftentimes the planner needs to prompt people to write their goals down. “If advisors aren’t asking clients about life goals and seeing if they are affordable or not, then they’re not doing the client a full service,” says Abboud. “Investing money is standard course, but a real financial planner should be asking what they want to get out of life.”

And when your client says he or she wants that villa in Mexico? Make it happen. “It might not be possible to live there permanently, but to go there two months a year is doable,” says Abboud. “Panama has great prices on villas, like $1,500 to $2,000 a month.”

Filed by Bryan Borzykowski, Advisor.ca, bryan.borzykowski@advisor.rogers.com