Will you outlive your money? Here's how to find out

Ted Rechtshaffen: Financial and estate planning isn’t quick and simple, but there’s no harm in testing the waters online for free

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We all have many financial questions, but probably the biggest is: Will I be financially OK for the rest of my life? This is especially concerning during times of trouble like these.

The question is a good starting point, but finding the answer usually starts with more questions: How do I find this information? How involved do I have to get? Can I find out for free online?

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The short answers are: you can find this information from a variety of financial sources; you will probably need to be involved and detailed to get meaningful personal value out of it; and, yes, you can find it at some level for free online.

Let’s start with the free-and-online aspect since there are some interesting tools to help in this area.

You can find many free retirement calculators online from the banks, some large independent wealth managers and big fund companies. These usually lead to an answer such as, “You need to save $815 a month in your registered retirement savings plan through (enter company’s name) mutual fund program.” Traditionally, these plans have been built with a focus on the period up to retirement, and less about the period afterwards.

To truly answer the question of whether you will outlive your money, I think there are only two places you can get this information for free online. One is through Planswell Corp., which has a well-designed online tool that asks several questions and provides you with some decent information.

The catch is that you need to provide your email address and phone number. Its business model is to pass this information along to a network of financial advisers who will follow up to offer investments, insurance and/or mortgages.

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It is not unreasonable to provide this information for free and for someone to call you. Having said that, you should understand what you are getting into when you provide your information. The other challenge is that you have no idea as to the quality of the financial person who will contact you or even what firm they work with until they contact you.

The other place to find information for free is through a new tool called the My Estate Value calculator that was developed in large part by our head of estate planning, Asher Tward. Not to be too self-promotional, but you can get a good sense of the likely value of your estate and your lifetime income tax bill at no cost and without providing any contact information.

This tool is actually quite sophisticated in the background as it uses tax tables, actuarial data and a variety of growth assumptions along with your personal data to develop meaningful numbers for you.

The single number showing the size of your estate is the fundamental answer to your question, “Will I be OK financially for the rest of my life?” It essentially asks, “How much in unspent wealth will I have at the end of my life?” The tool allows you to easily adjust numbers — work fewer years, spend less, gift money to family — to see the impact of each of those changes.

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But let’s be realistic. A free online tool only takes you so far. If you are serious about your financial health, especially as you start thinking about retirement, or are faced with major changes such as an inheritance, becoming divorced or widowed, real estate decisions or setting up your will, you want to do this right. You want to take it seriously and talk to a certified financial planner with a CFP designation.

To do it well usually means either paying a fee-only financial planner (you can find a list here), or if you are wealthy enough, you can get a sophisticated plan offered by a wealth-management firm, whether through the banks or independent firms.

In the case of wealth-management firms, you can sometimes get a plan for free, but it is effectively paid for from your investment fees. The other challenge with a “free” plan is finding someone with the skill to help you implement the plan long term because the planner is often a different person than your investment adviser.

One other interesting company that offers a paid financial plan, but is more online and not in person, is Viviplan, a fee-only financial planning firm that requires you to be a little more organized and on top of your finances in order to do a financial plan without in-person support.

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No matter what or who you use, you will want to do a more thorough and personal plan when the time is right to do so. Every family and situation is unique, so it takes some time and expertise to make a proper plan and to then implement it. The important thing is that you should be in control and fully aware of how you are paying for your detailed financial plan.

At the end of the day, nothing worthwhile is quick and simple, neither is your financial and estate planning. But there’s no harm in testing the waters online for free.

Ted Rechtshaffen, MBA, CFP, CIM, is president, portfolio manager and financial planner at TriDelta Private Wealth, a boutique wealth management firm focusing on investment counselling and high-net-worth financial planning. You can contact him through www.tridelta.ca.

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