Curveballs and Dreams: Investing in Yours Pre-Retirement Years

By Trevor Lagerwerf, PFP, PenFinancial Credit Union

As a kid, I thought that hitting a baseball would be easy. Until I tried to hit a curveball. I wanted that homerun. So I had to learn how to adapt to the ball that was thrown at me. Then I had to learn how to hit a fastball. With each pitch, I learned it wasn’t about just hitting a baseball, or avoiding being hit by that baseball! It was about hitting the baseballs I was thrown. And running the bases with all my heart.

When I became a wealth advisor, I realized that personal finance is another place where one question might be answered with five questions instead of a simple answer. For example, a member may ask “should I invest in a TFSA, RSP, or pay down my mortgage?” In response, I might ask:

• How much income do you make?

• What income sources will form your retirement?

• Have you in the past or are you currently part of a pension plan?

• What is the interest rate on your mortgage?

• Do you have other debts to pay down first?

Financial planning is not a one-size-fits-all mentality. Each investor is unique and needs to be treated that way.

As I work with members in their 40s and 50s, I see how dreams and realities differ for people in their pre-retirement years. These people have often dealt with more curveballs than they care to remember. I think about the member who lost his job, or the member who lost her wife, or the member who found a child living at home again after a divorce. We looked at the bigger picture of wealth to them. We individualized their plans to follow the paths of their lives so that they could achieve the wealth they wanted.

1. Don’t shake the vending machines.

2. Come up with a realistic financial plan.

Most of the members I meet know that the lottery is not a longterm strategy for funding their wealth, retirement, or happiness. But sometimes I need to help pull them out of that dream. I try to be gentle. I ask what would happen if they took the $25 a week they spent on lottery tickets and directed it to an investment that averaged a 5% return over the long term? I explain that they would have approximately $100,000 after 30 years, which is approximately $100,000 more than their friend who is still buying lottery tickets would have.

When I meet with members in their pre-retirement years, I help them assess their spending, their definition of wealth, and their needs to create and work with a viable financial plan. At this stage of life, they can focus on accumulating assets and planning more realistically how they want to share their wealth. It’s important to help them look beyond the small picture, like rate of returns on investments, and see the bigger picture: the importance of getting advice on decisions that make a bigger impact on meeting your goals and giving back. Investing in your future with an individualized plan makes sense.

Don’t get locked into a one-size-fits-none plan. Ensure you’re well educated and that your Advisor works with you to help you with a financial plan that offers backup for life’s curveballs. TM

Look Beyond the Lottery: Find a Strategy to Achieve Your Dreams

Have you seen the commercials featuring the happy couple that won the lottery? They bought a cottage and their life was so great because they had so much money. Those ads always make me laugh. In small print at the end, it should say, “Odds of being killed by a vending machine (1 in 112 million) are significantly higher than winning the lottery.” There are two take-aways from this example:

Trevor Lagerwerf, PFP is a Wealth Advisor at PenFinancial Credit Union. He is passionate about all things financial, including improving his member’s lives by providing expert, free financial advice since 2012. Trevor and his young family live in St. Catharines and he enjoys giving back to Niagara in many ways including the giving of blood (over 60 donations), participation in Movember (Men’s Health) fundraising and support of the Niagara Toolbox Project. Visit www.penfica for details.