Diamond Retirement - Prime approach to planning

The Prime Approach to retirement planning employs the creative use of income-producing assets and benefits to deliver a higher level of income during the prime retirement years. This, combined with investment management, health risk management and wealth transfer strategies provides a more fulfilling retirement. The Prime Approach strategy applies to those within ten years of a target retirement date, those about to retire and those who are recently retired. The Prime Approach involves four distinct planning channels, each of which is a process unto itself. We produce a written financial plan that addresses these four areas. Typically, we find that clients initially adopt strategies which address only one or two of the areas, with continuous additional planning to address the other areas as circumstances unfold. The approach to and structure of the plan follows the six step planning process as prescribed by the Financial Planners Standards Council of Canada.

The Four Planning Channels

1. Structural Planning

Purpose: To create your desired income stream by triggering assets and benefits in the most efficient manner. This involves determining which assets and benefits to use, and when to use them. This normally results in a strategy that combines income from a number of different sources. Our bias is to first engage those assets which are the least flexible and least tax-efficient to 'fill up' the lower tax brackets and create the 'base' income, reserving the variable and/or tax-favoured sources as discretionary sources in order to manage income and taxation levels at different stages of retirement.

Your written plan will:

Assess your current readiness or capacity to achieve the desired retirement income
Determine your objectives and priorities
- Income targets
- Critical dates
- Lifestyle objectives
- Survivor income issues
- Asset use
- Your investor profile
Compile necessary information
- Inventory of assets and benefits
- Documentation including tax returns, will, investment statements etc

2. Investment Planning

Purpose: To establish tailored investment portfolios based on your investor profiling, tolerances and the rate of return objectives driven by your written financial plan. The bias here is a view to risk management.

Assess risk tolerance
Determine optimum portfolio asset mix
Select appropriate investments
Establish servicing and communication expectations
Establish guidelines for rebalancing, taking profits, portfolio management
Create your "Investment Policy Statement"

3. Health Risk Management

Purpose: Our objectives here are twofold. First, the planning in this area is designed to reduce or eliminate the use of your personal assets and income to cover the costs of health related risks including critical illness, and long-term care. Second, we want to ensure that the standard of living is protected for both the individual afflicted and the caregiver so that both of you can maintain your lifestyle and dignity.

Identify risk issues
Establish lifestyle goals
Assess program and funding options
Establish a course of action for contingencies
Address Power of Attorney, Health Care Directive needs

4. Wealth Transfer

Purpose: To plan for the ultimate transfer and disposition of your assets in an orderly manner consistent with your objectives and with a bias to minimizing estate taxes.

Define your objectives in this area
- - What to whom
- - Timing
- - Special needs considerations
Define estate tax liabilities
Determine any inter-vivos gifting goals / opportunites
Consider charitable gifting options
Position assets for easy transfer through beneficiary designations / joint ownership
Reduce exposure of assets to probate
Determine that your written will is consistent with your objectives

By integrating all four channels into one comprehensive plan, The Prime Approach to retirement income planning allows you to obtain the greatest benefit from your retirement assets. You will have the freedom, flexibility and confidence to use the assets you have accumulated to maximize your enjoyment of the best years of your retirement. You will be able to do this and still make provisions for addressing health risk issues and maximizing the transfer of wealth from your estate to your family, beneficiaries and charitable causes.