Money for Life consists of 5 must-have, needs-based conversations at each life stage to help clients plan to achieve their financial goals. In part 3 of this 5-part series, we’ll look at saving needs.

Whatever stage of life they’re in, your clients likely have savings on their minds. And the majority of them are expecting to rely heavily on their own savings and investments to fund their retirement. Unfortunately almost 40% of working Canadians worry about outliving their savings.1

A savings plan can be simple and pain-free. And the sooner they start saving, the better.

However, when faced with competing financial priorities, many Canadians don’t put saving — especially saving for retirement — at the top of the list. As a trusted advisor, having a saving needs conversation with clients at each life stage can help them understand how saving can affect their financial and retirement goals. Your advice can make a difference. Of those who work with an advisor, 60% are satisfied with how much they’re saving for retirement, compared with 33% of those without an advisor.2 And once clients know how much they need to save for their short- and long-term goals, they’ll have a better idea of what they can spend on their basic, health, lifestyle and legacy goals in retirement.

Are Canadians saving enough?

According to the 2016 Sun Life Retirement Now Report, 34% of Canadians rate paying down debt as their top financial priority. When clients have high levels of personal debt, saving for retirement isn’t as much of a priority. In fact, only 14% of Gen-Xers, 19% of late boomers and 20% of early boomers rank saving for retirement as their top financial priority. Yet surprisingly, 72% of Gen Xers, 69% of late boomers and 74% of early boomers expect to rely on their savings and investments to fund their retirement.3

How much should clients save?

If we consider that $316,0004 is the average Canadian retirement savings and that retirement could last 30 years (or more), this means a client would have a retirement income from their savings of approximately $10,500 per year. Would this cover their needs in retirement?

You may be familiar with the general rule that clients will need to replace about 70% of their income in retirement. If we apply this to a client who makes, for example, $70,000 per year, 70% of their annual income means they would need $49,000 per year in retirement. Although other sources of income such as Canada Pension Plan (CPP), Old Age Security (OAS) and, perhaps in the case of this client, a defined benefit plan will be added to their annual income in retirement, there’s a big gap between the average $10,500 per year from their savings and the $49,000 per year they would need to replace.

By starting to save earlier, thanks to compounding, regular contributions to a savings plan can grow to a significant retirement fund when invested over time. If clients start saving later in life, they’ll need to contribute significantly more to retire with the equivalent amount of savings.

Offering the right solutions at the right time

The right mix of products in their portfolio can help clients effectively save for their short- and long-term goals. To offer clients the right mix of wealth products, it’s important to have needs-based conversations with them at every life stage.

Here are some things to consider when you have conversations with clients about their saving needs:

Building for the future Getting ready for retirement In retirement
Starting a regular saving program may be the key to helping clients reach their short- and long-term goals. While clients in this life stage generally have a higher risk tolerance and may be suited for an aggressive investment strategy, it’s important to discuss their needs when selecting wealth products for their portfolio. As retirement gets closer, now is the time for clients to maximize the savings that they’ll ultimately rely on in retirement. Check their investment portfolio to see if it still aligns to their goals. Clients who are about 10 to 15 years away from retiring often de-risk their portfolios to preserve capital. Clients in this life stage will be converting their savings to income to help cover their basic living, health, lifestyle and growth, and legacy needs. A saving conversation can easily pivot into any of the other needs-based conversations offering further opportunity to deepen your relationships with clients. Revisit a client’s plan often to make sure they’re still on track and able to enjoy their retirement their way.

Building for the future – Career builders and younger families.

Getting ready for retirement – Those who are about 10 to 15 years from retiring.

In retirement – Those who are going to retire in the next year, are ready to convert retirement savings into income, or are already retired.

Regularly connecting with your clients will not only help them reach their goals but can also help you build your business and build stronger long-term relationships.

Get continuing education (CE) credits – take the saving needs course

Available on Sun Life Financial’s Education Hub, you can take the Money for Life – Saving needs course and earn CE credits. During this 1-hour, self-study course, you’ll learn more about:

  • how Canadians are feeling about their savings today and their ability to save for retirement,
  • the importance of having needs-based conversations with clients at each life stage, what those conversations might include and the opportunities they bring, and
  • possible wealth solutions for clients at each life stage.

Saving needs conversations at every life stage will help you understand clients’ priorities so you can help them plan for their future and retire with confidence.

For more information about Money for Life and saving needs, visit where you’ll find tools and resources to help you get started. If you have any questions, please contact your Sun Life wealth sales team.

Money for Life – Sun Life Financial’s customized approach to financial and retirement planning offers a conversation framework to help clients talk about their short- and long-term goals, and get them thinking about how their needs will change over time. Supported by a suite of tools and resources, this approach can help you have conversations and present the right mix of life, health and wealth solutions.

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1 2016 Sun Life Retirement Now Report

2 2016 Sun Life Retirement Now Report

3 2015 Sun Life Canadian Unretirement Index

4 Investor Economics, Household Balance Sheet, 2015.