Career Stages
As your life and career changes so do your needs. The challenges you face early in your career will be different than those your experience later in life. It is critically important to be aware of the risks you face day to day and to have the right plan in place to ensure you and your family are protected should an unfortunate event occur. It is equally important that your money is working for you – not the other way around. We are here to help provide solutions, to ensure you are on the right path towards financial success and independence.
Characteristics:
- New to the work force
- Not at full earning potential
- Contemplating/recent home purchase
- Single or newly married, perhaps with young children
- Significant debt (student loans, lines of credit, mortgage)
- Minimal assets
| Challenge | Solution |
| Effectively reduce debt | Explore options for consolidation |
| Income protection | Adequate life & disability insurance |
| Emergency fund | Available line of credit |
| Saving/investing properly | Identify goals and objectives |
| Reduce debt or save? | Do both – a balanced approach is key |
Summary
In the early stage of your career, it is important to develop a strategy for asset accumulation and debt reduction. It is tempting to place too much emphasis on reducing debt, however, a balanced approach in most cases will build your net worth more rapidly. In order to determine the optimal balance a number of things need to be considered including the total amount of debt, interest rate on debt, expected growth rate for various investments, tax rates, and goals/objectives.
Characteristics
- Established career
- At full earning potential
- Considering other investment options
- Married with teen/young adult children
- Minimal debt
- Rapidly accumulating assets
| Challenge | Solution |
| Grow assets efficiently | Tax-advantaged investments |
| Income protection | Adequate life & disability insurance |
| Emergency fund | Available line of credit and/or cash |
| Reduce investment risk | Balanced/diversified asset allocation |
| Reduce income tax payable | RRSPs, incorporation, income splitting, and life insurance |
Summary
The middle stage of your career is more about asset accumulation and capital appreciation. In this stage your earnings have peaked and the need to manage tax exposure is critical. Tax minimization, both on earned and passive income, can be realized through incorporation, income splitting, and utilizing tax-advantaged investment vehicles such as RRSPs and permanent life insurance policies. Life insurance policies are also an effective planning tool.
Characteristics
- Reduced workload earnings
- Minimal debt/debt free
- Contemplating/recent vacation property purchase
- Empty nesters (downsize)
- Drawing income from investments
- Asset decumulation stage
| Challenge | Solution |
| Preserve estate/capital | Permanent life insurance (joint-last) |
| Cash flow shortfall | Liquidate real estate (downsize) |
| Emergency fund | Personal Line of credit/cash |
| Reduce investment risk | Conservative asset allocation (income) |
| Intergenerational wealth transfer | Corporate reorganization/life insurance |
Summary
In the late stage of your career, you are at or near the point where your employment earnings have slowed or stopped altogether so your income earned from investments is a crucial part of planning moving forward. You should have little or no debt so if investment earnings are not sufficient to meet lifestyle needs downsizing principal residence or selling an investment property may provide a necessary boost in liquidity/cash flow. Proper planning and use of life insurance can help minimize tax and preserve estate values.