Financial Planners and Investment Advisors are spending less time yet creating better financial plans—learn how in this 20-minute retirement planning tutorial.
Efficient retirement planning
During this session, you will learn how to run through the Scenario Setup section in Snap Projections to create your base spousal plan. We will explain each area in detail, ensuring complete transparency with how the software works. We will then walk through the combined planning page, which shows you the initial output you created for the couple by entering their initial information.
In less than 20 minutes, you will learn how to create a base retirement plan and explain it to your clients.
Watch the retirement planning tutorial
A walk-through of the Scenario Setup
Client
Here we enter the client’s basic information: name, province of residence, and date of birth for both spouses.
General
The general section is where we review and updates the general assumptions for our projections. For efficiency, there will be system defaults, but you can change them as needed. You can select what year to start the projections, your clients’ planned retirement age, and the length of the projections.
Next, you can update the inflation rates and rates of return if you’d prefer to use something other than FP Canada’s most recent guidelines (which are the software default).
Expenses
The Base Expense represents the clients’ annual after-tax spending target during retirement. It is not what they are spending now or before retirement. If they do not have a target after-tax spending for retirement just yet, you can leave this area blank and come back to it.
We can also create Additional Expenses to include goals-based planning in addition to cash-flow planning. We can include one-time expenses (such as a vehicle purchase) or recurring expenses such as a vacation every second year.
Incomes
Here we can include employment income plus any other sources of income we want to include in the plan. This can be indexed to inflation, and we have additional options for tax and RRSP eligibility. This area is highly flexible to account for any type of income your clients may have, including non-taxable gifts such as an inheritance, as well as Defined Benefit Pension Plans.
Assets
Under Assets we can enter all financial and real assets the client has. Whether it’s a TFSA, a joint RRSP, or a First Home Savings Account, the account modules will appropriately and accurately model and tax these accounts. There are additional settings to build in existing contribution room for current or previous years, ensuring accurate contribution room as time goes on. There are guardrails in place that will ensure you do not over-contribute to tax-advantaged accounts.
When adding in any real estate, we have options for capital gains tax as well as future purchase and sale ages, to help Advisors model potential plans and what-if scenarios.
Debts
Here we can account for any outstanding debts, such as a mortgage. If we set up a mortgage and link it to the primary residence, this will ensure this mortgage is paid off, if and when we initiate the sale of this property in the future.
Government Benefits
Snap will provide national average defaults for CPP/QPP and OAS, but if you have the clients’ statement from Service Canada, you can enter in their personal information to update what their future government benefits will be.
Additional sections not covered in the video:
Insurance
The Insurance page is used to model existing or potential Term Life, Permanent Life, Disability, and Critical Illness insurance policies. You can also use our personalized Life Insurance Needs Analysis tool to help your clients determine whether or not they are adequately protected.
Education
For clients with children and education planning needs, you can add one or more RESP accounts to the projections. This allows you to track the contributions, any grants that would be applied, the projected balance of the account, and eventually the withdrawals.
Settings
In the Settings section, you can access more advanced planning features for highly personalized planning. This area allows you to make changes to the system defaults for items such as Charitable donations, income taxes, and portfolio settings.
Corporations
Snap provides comprehensive corporate planning capabilities for those Advisors who serve incorporated clients. You can learn more about the Corporate planning module here.
Planning pages
About 17 minutes into the lesson, we arrive on our Combined Planning page for Bill and Vicki. When setting up a spousal scenario, the combined page is essentially going to serve as your results and summary page. You will make changes and adjustments to the plan on each individual’s page, which can be accessed by clicking their names in the top left corner.
As we move from left to right, we can see the year, the clients’ ages, and their retirement date, which in this case is when the cash-flow management (retirement) is set to start. After that, we can see their after-tax spending, as well as the additional plans for their vacation every second year and the new truck.
We can see their employment income, income from government benefits and the expected inheritance, as well as the total taxes being paid each year. Next we can see the annual breakdown of the financial assets, with Snap’s default software logic doing the decumulation work for you to maximize the clients’ after-tax spending and defer paying taxes.
Just like that, we’ve created a base spousal retirement planning scenario.
Next steps
Canadian Financial Advisors, Planners, and Investment Managers are eligible to start a 14-day Free Trial of Snap Projections financial planning software. https://bit.ly/free-trial-Snap-Projections-for-Advisors
