Will you be ready for retirement?
R E T I R E ME N T
“I’ll start in a couple of years. I have plenty of time.”
“I don’t need to worry about inflation.”
Achieving the retirement of your dreams can be possible with a solid plan and a commitment to invest for the long term. We can help you realize your retirement goals, whether it is as early as next year or in 40 years. If you’re just starting out and already building toward a nest egg, or approaching your retirement years, this guide can show you how easy it is to take advantage of your retirement plan – no matter what stage you are at in life.
Contents Just Starting Out
Make a Choice for Your Future. Planning for your retirement has to start somewhere. We can help you determine which kinds of investments are right for your needs and put you on the path to achieving your goals.
Building Toward Retirement
Stick With a Strategy. You have been investing for a while. Use our investment strategies, financial tools and the expertise of an investment advisor to keep your retirement plan on track.
Keep Investing in Retirement. You have almost reached retirement, but you do not have to spend your retirement savings all at once or stop investing. We will help you with strategies designed to preserve and increase your wealth throughout your retirement.
Going Further For You
Solutions for investors of all kinds. Renaissance Investments partners with financial advisors to deliver a comprehensive platform of investment solutions and support to go further for you.
Renaissance Investments 3
J U S T S TA R T I N G O U T
Make a choice for your future “I’ll start in a couple of years. I have plenty of time.”
“I’m short on cash right now.” I just started working. Why should I start investing right away?
I can only invest a small amount. Is that enough?
This is actually the best time to think about your retirement. A retirement plan is a great place for you to set aside money for your future. With every paycheque, you can invest money in an account designed exclusively for retirement. You probably have a lot of plans for your income, for example, bills, recreational activities and giving to others, so it may seem practical to choose today’s financial obligations over tomorrow’s retirement plan. Rather than avoid planning for tomorrow, make investing in your retirement the priority for today. Don’t worry if you’re not sure how to get started. Your investment advisor is here to help you manage your retirement plan and guide you in choosing the right investment solution to meet your needs.
Our investment solutions are designed so that you can save for retirement regardless of the amount of your budget. Small amounts add up, too. For example, you may already spend $4 or $5 a day for your morning latté. Trimming back on this expense could save you $20 to $25 a week, which is a great start. When you sign up for a regular investment plan, we’ll invest the money the way you’ve decided. And it’s easy to increase your contributions at any time.
Hypothetical Future Value of Investment
Monthly Investments Can Add Up $140,000 $120,000
$200 per month
Investing just $25 per week can grow to over $20,000 in 10 years
$150 per month
$100 per month
$60,000 $40,000 $20,000 $0 1
Months of Investing
This is a hypothetical example to show the benefits of making monthly investments over time. It assumes an initial investment of $2,500 and an average annual return of 7%. This chart does not represent any actual investment, and the projections are before taxes. The value and return may vary, and different investments may perform better or worse than this example. 4
J U S T S TA R T I N G O U T
Three steps to create your retirement plan 1.
Define your goals
• Name it. Know what you’re investing for. • Date it. Determine when you’ll use your investment. • Estimate the amount. Add up how much you may need for each goal.
• E valuate your risk tolerance. Decide how much of the markets’ ups and downs you’re comfortable with. 2.
Design a strategy
• D iversify. Spread your investments across different types of assets to lower your overall risk. • R un the numbers. Calculate how much you’ll need to invest to meet your goals or how much income you’ll need in retirement. Your investment advisor can help you determine the appropriate amount.
Execute your plan
• T ake action. Select an investment that aligns with both your risk tolerance and goals. • M ake it automatic. Set up regular investments to help ensure you’re consistently building on your investment.
Did you know? Canadians over the age of 60 have accounted for more than a third of the net gains in the workforce since 2009. Statistics Canada, 2012.
Renaissance Investments 5
B U I L D I N G TO WA R D R E T I R E M E N T
Stick with a strategy “I already invest in my company’s pension plan.” “I’ll get Canada Pension Plan and I’m already investing. What’s next for me?
Old Age Security benefits.”
If you’re already investing for retirement, you understand the potential benefits of saving now and maintaining a solid financial plan based on your investment goals. Since you started investing, you may have experienced other changes – financially, within your family or at your job – which could result in new investment goals. When life changes, investment objectives may also change. We can help you stay on track and make adjustments to your existing investment strategy.
I want to be comfortable in my retirement. How much will I need?
As a rule of thumb, you will need 70 percent to 80 percent of your current income to maintain a similar lifestyle after you retire. For example, if your annual salary is $50,000, you may need $35,000 to $40,000 a year in retirement to continue your existing lifestyle. The amount you’ll need also depends on your living expenses and how you’ll spend your time. Ask yourself these questions: 1. How many years do I have until retirement? 2. What do I want to do in retirement? 3. When will I receive Canada Pension Plan (CPP)/Quebec Pension Plan (QPP) benefits and how much will I get? 4. W ill I have other income (e.g., a pension plan, a part-time job, inheritance or the sale of my house)?
Contribute as much as possible
Whatever you’re contributing now, even a small increase can make a big difference, especially when you’re investing regularly over a long period. With a modest return, it’s possible to build a significant amount by the time you need it in retirement. As you build your retirement plan and identify potential sources of income, remember that CPP and Old Age Security (OAS) were never designed to be more than a supplement to your existing income. In fact, between 1976 and 2010, median income from OAS/Guaranteed Income Supplement (GIS) remained relatively steady at about $6,200 per year (in 2010 constant dollars) while median income from CPP/QPP was $6,900. That is a small percentage of the total income required in retirement, so it’s up to you to make up the difference.
Increasing contributions pays off $160,000
Hypothetical Future Value of Investment
The more you can save, the better your chances of retiring comfortably. If you can, max out your contribution up to the eligible registered retirement savings plan (RRSP) contribution annual limit. Not only does it lower your current year’s taxable income, your earnings grow tax deferred until you withdraw the money from the RRSP plan.
Small increases make a big difference
Percentage of Salary Contributed 10 years
Sources of seniors’ income, 2010 (%) n 49% Private 33% Pensions and RRSPs 16% Investments n
41% Public 22% OAS/GIS 19% CPP/QPP
This is a hypothetical example to show the benefits of making monthly contributions for different periods of time with different contribution amounts. It assumes an annual salary of $35,000 and an average annual return of 7%. This chart does not represent any actual investment, and the projections are before taxes. The value and return may vary, and different investments may perform better or worse than this example. This strategy does not ensure a profit and does not protect against loss in a declining market.
n 10% Other Sources Note: ‘Other sources’ includes employment earnings, other incomes, and all government transfers other than OAS/GIS and CPP/QPP. Source: HRSDC calculations based on Statistics Canada. Income of individuals, by sex, age group and income source, 2010 constant dollars, annual (CANSIM Table 202-0407). Ottawa: Statistics Canada, 2012.
Did you know? Canadians are living on average 20 years after retiring. Statistics Canada, 2012.
Renaissance Investments 7
Keep investing in retirement “I don’t need to worry about inflation.” “I really don’t know how much I need, but I’ve worked hard for my retirement. Will I be ready?
I’ll probably be fine.”
Retirement may mean you are finished working – but it doesn’t mean your money should stop working. Now it’s time to put your investments to work for you through a personal retirement strategy. You’ll need to determine: • How much of your money you want to invest; • How much you can withdraw and other goals you may have We have the tools and expertise to help you put a plan together, and we’ll work with you throughout your retirement years to help you reach your goals.
How can I preserve my wealth and make my money last?
Switching all your assets to conservative cash-type investments may appear to be the safest option, but some risk may be involved. For instance, you could be spending 20 to 30 years in retirement. With this in mind, you need to invest in solutions that will help outpace inflation, preserve your assets and provide a steady source of income, while offering some growth potential (as shown in pie chart below).
Balanced Income Portfolio n 60% Income
Did you know? Conservative asset allocation should still include up to 40% equities within a portfolio to allow for growth potential.
How much can I withdraw from my registered retirement plans?
MINIMUM RRIF WITHDRAWALS The minimum withdrawal from a RRIF is based on the value of the assets in the plan on January 1 of each year. Starting in the year after your RRIF is established, you have to be paid a yearly minimum amount. RRIFs established prior to 1993 are generally “qualifying RRIFs” and withdrawals may be slightly lower than the percentages below for ages 71 through 77 inclusive. The percentages shown are for post1992 RRIFs.
Before the end of the year you turn 71, RRSPs must be converted to registered retirement income funds (RRIFs). A RRIF allows an investor to convert their retirement savings into retirement income. There is a minimum annual withdrawal required each year based on the value of the RRIF and the plan holder’s age (or spouse’s age) at the beginning of the year the withdrawal takes place. The payments made to you from your RRIF are taxable, but the investment in a RRIF continues to grow tax-deferred until they are withdrawn.
Did you know? Changes to Old Age Security raise eligibility from 65 years of age to 67 (effective April 2023).
Renaissance Investments 9
Going further for you You need an investment company that understands success doesnâ€™t depend on keeping pace â€“ it demands going further. With solutions for investors of all kinds, Renaissance Investments partners with financial advisors to deliver a comprehensive platform of investment solutions and support to go further for you:
The line-up of Renaissance mutual funds provide exposure to equity and fixed-income securities from markets around the world. Designed to provide a balance of growth, income and capital protection, Renaissance funds are ideal to build a portfolio or to add greater diversification and performance potential to your existing portfolio.
Axiom Portfolios provide the benefits and peace of mind of all-in-one sophisticated portfolio management. Axiom Portfolios are constructed to manage risk and solidify the potential for returns by ensuring portfolios are broadly diversified on mulitple levels.
Enhanced Pricing Options
Renaissance Premium, Select and Elite Class options reward larger investments through lower fees, providing additional value and enhancing long-term portfolio growth.
Renaissance solutions feature investment managers from around the world, each carefully selected and continuously monitored by an experienced manager research team.
Renaissance Investments 11
Going Further For You
Getting started Speak with your investment advisor to learn more about our range of mutual fund and diversified portfolio solutions that can provide the income you need for retirement.
In business, just like in history, there are some leaders that give it their all, and some that are content to give just enough. At Renaissance, we don’t believe in going part way. You need an investment company that understands success doesn’t depend on keeping pace — it demands going further.
Renaissance Brand Story
1 888 888 FUND (3863) www.renaissanceinvestments.ca
Commissions, trailing commissions, management fees, and expenses all may be associated with mutual fund investments. Please read the Renaissance Investments family of funds simplified prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated. Renaissance Investments is offered by CIBC Asset Management Inc. ™ Renaissance Investments is a registered trademark of CIBC Asset Management Inc. 02546E 12/12
Published on Jan 23, 2013