I like to see what our neighbours in Quebec are thinking about the pandemic. In the March edition of the Quebec magazine L’acualité there is an article entitled “Comment Vieillir Riche Malgré La Pandémie” which we can translate into English as “How to Grow Rich in Spite of the Pandemic”.
One part of the feature deals with retiring in the midst of a storm. Over 60% of Quebecers do not have a pension fund. Under the Quebec Pension Plan (QPP) you have a right to collect at 60. Fortunately stock markets have rebounded and regained all that was lost since the beginning of the pandemic.
So what are the tips that might help if you are retiring during the pandemic?
- KEEP SOME LIQUID RESERVES: David Paré a financial planner with Desjardin says most of his clients do not have pension plans and have had to save for their retirement. On the average his clients have saved $750,000 to $3,000,000. Several of his clients panicked with the plunge of the markets and lost sums of money by selling on the downward curve. Paré recommends you have a liquid reserve that is capable of lasting 2-3 years. This can consist of short-term savings, GIC’s or bonds. Paré says that people without liquid reserves may be obliged to sell their shares at an inopportune moment which is bad for long term investing.
- DIVERSIFY YOUR SOURCES OF REVENUE: Paré says to be safe from a crisis you have to establish a level of risk and the fluctuations of the market prior to retirement. He says his clients sleep well and their choices do not wake them up when they are sleeping. Hélene Grandmaison a financial planner says she asks many questions such as needs, desires, wishes and dreams. There are never two identical cases.
- TAKE RISKS WITH MODERATION: A well constructed portfolio should give you a return of between 4-7% without medium- or long-term risk. With GIC’s offering rates around 1% that is less than 2019’s inflation rate of 1.1%! Louis-Bernard Dubé with iA Groupe in Terrebone says a certain amount of prudence is required and to get there you have to invest in the markets.
- ADOPT YOUR PORTFOLIO TO YOUR REALITY: All financial planners are armed with tools that can work with all variables like matrimonial status, health, employment status, marital status and fiscal rules. Dubé advises to review your financial plans every two to three years.