Case Study 8: Comfortable and concerned

Margaret Chomsky is a 58 year old widow. She currently works as an executive assistant at a local manufacturing company and has been with the company for the past thirty years. Margaret's two sons, ages 24 and 26, still live at home and are attending a local university. Her oldest son, Brad, will graduate in the next year while her youngest son, John has just started his post secondary education.

Margaret has been diligently planning for the future ever since her husband died seven years ago. While she received a small insurance policy from her husband, she has been able to use the proceeds to buy her house and put money aside in her RRSP.

Her financial situation

Margaret has always been conservative and has her $200,000 RRSP invested in GICs and conservative mutual funds with the BMO Financial Group. In addition, she has a disability benefit package at work.

Margaret's house is worth over $230,000 and she owns it free and clear. She has also worked hard to keep her credit card balances down to a minimum. If anything, Margaret is afraid to spend any money to enjoy the kinds of things that she would like to do. It has been many years since she took a trip or did something “just for me”.

Her main financial burden over the past few years has been to make sure that her two sons received an education. While her husband had put aside a small amount of money for them, much of Margaret's extra money has been earmarked for tuition and books. Thankfully, Brad and John each work and are able to pay for their other expenses while they are in school.

Margaret has never considered herself an informed investor and has depended heavily on the advice of her BMO financial planner. She knows that she should have invested more money in mutual funds over the past decade, but has had some comfort from the fact that her nest egg has been safe and secure.

While she is concerned about the money that is currently in her equity mutual funds, she is equally concerned about the low interest rates that she is receiving on her GICs. Despite her financial planner's best efforts to suggest an asset allocation strategy for Margaret's savings, Margaret always feels uncomfortable taking on any risk.

“I still don't have enough to retire on”, she muses. “The way it's going, I am going to have to keep working for the next ten years just to look after my basic expenses.”

Her concerns about the future

• Will her boys have enough “to get them started”?
• Is she in the ‘right' kinds of safe investments given today's rates?
• How long can she continue to work?
• Does she have enough to retire on?
• Must she keep working?

What needs to be thought out

Margaret must find a way to feel less fearful and more optimistic about her retirement.

The following will give you a sense of the types of considerations that would be addressed when Margaret meets with a BMO Investment Professional:

• What kind of pension plan does she have at work and what are the benefits?
• How long would Margaret like to work and are there options for graduated retirement, job-sharing etc. at her company?
• What kinds of things would Margaret like to do with her time if money were not an issue for her?
• What makes Margaret uncomfortable about her mutual funds and what would make her feel better about where her money is invested in general?
• What kind of savings plan do the boys currently have and can the Bank help them get started?