“When you retire, you switch bosses – from the one who hired you to the one who married you.”
– Gene Perret, a comedy show writer and producer
Written by Steve Nyvik, BBA, MBA, CIM, CFP, R.F.P.
Financial Planner and Portfolio Manager, Lycos Asset Management Inc.
Our living standard we can manage while working and the one we will have when we no longer work is a balancing act. We have to sacrifice today by setting aside money to have resources to fund our retirement living needs. The more resources we can set aside, the better our retirement lifestyle. Or, we might be able to afford to retire at an earlier time.
The point of quitting work feels like stepping off the edge of a cliff. Once we have committed, that may very well be the end of our ability to generate income. As we approach the edge of that cliff, we may experience anxiety.
Retirement planning seeks to help ease that anxiety through preparation for that time:
- to help you set aside enough so you can become financially independent,
- to give you the confidence with Retirement Cashflow Projections to know that you can afford your chosen retirement living standard, and
- to get you to think about what you’ll do during retirement so that you can have a happy and meaningful life.
Bringing your dreams into focus
When you are years away from retirement, you might simply have a hazy picture of what it might look like. The key thing is that you are saving as much as you can. As you feel you are getting closer to retirement, that’s when we need to take out the binoculars to see more clearly what it might look like.
Here’s where you need to sit down with your spouse and visualize your future and think about the following:
What is your life’s passion?
What activities would make your life meaningful, happy and complete?
- If you could do anything you want, time and money aside, what would you do?
- If you had only five years left to live, how would you spend those years?
- How would your answer differ if you had 20 years left to live?
- How important are religious / charitable pursuits or giving back / helping people?
What would you most like to do if you had more time or resources? Use your imagination to create the possibilities for your future.
- Hobbies — restoring an old cars, designing and making quilts, gardening, writing a novel, golf, sports, making wine/wine tasting, interior design / renovating, antique collecting, refinishing, cooking / home entertaining, internet, crafts, movies
- Volunteer work — building homes for the homeless, teaching people, volunteering with a charity
- Starting a business / full or part time work in a new field
- Learning — going back to school, learning another language, getting your pilots license
- Relaxing and enjoying life — reflecting, reading, quiet time, art / music, photography
- Caring for parents, children or grandchildren
Who do you want to spend more time with?
- Spouse or partner — consider new activities you may try together
- Family — how far away are your parents, children and grandchildren?
- Friends — how do you hope to entertain and remain socially active?
- New friends — how will you meet new people? (consider classes, clubs and organizations)
Where do you see yourself living?
Where you want to live is an important part of the picture. Do you want to be part of a community? Do you want to try a new climate or lifestyle? Do you want to live in multiple locations?
- Stay in the area — loft in the city, current home, smaller/maintenance-free home
- Move closer to family — spend time with children, grandchildren or parents
- Winter getaway – living part time here and part time in some sunny destination
- Change your lifestyle — simplify life, live abroad, on the go
- Relocate near activities you love — active outdoor setting
Where do you dream of traveling?
- Where do you want to travel? — Southern Europe, Middle East, Asia; historical sites, trace your roots, visit friends or family
- How do you want to travel? — motor home, car, bicycle, motorcycle, plane
- How much traveling do you want to do? — number of trips each year, duration
- Who do you want to travel with? — spouse or partner, friends, children, tour groups
How do you intend to stay healthy and active?
Your lifestyle is changing. Think about this in broad terms, including mental and physical health – a healthy soul and a nurturing environment.
- Physical fitness — if you’re not taking care of yourself now, you should start as soon as possible. There are few things worse than suffering with serious health problems. So don’t let the golden years be torturous. Consider: health club, personal trainer, walking, hiking, dancing, mountain biking, sports, golf, exercise videos, boating
- Mental fitness — classes, concerts, playing chess or bridge, writing a book, meditation
How do you want to make your lasting mark?
What do you want your legacy to be? Remember, legacy doesn’t necessarily mean money. It may mean your values or lessons you learned. It is what’s important to you — what you want to pass on to others.
- Family — children, siblings, parents, friends, pets
- Schools — your alma mater, your children’s schools
- Charities or causes — food shelves, shelters, the arts
- Spirituality — your place of worship, helping people, getting to know God
- Medical/scientific organizations — research or treatment for diseases that affect you or those close to you
But Can You Afford It?
Once you’ve got an image of what retirement can look like, you then have to price out what it will cost. You don’t want to retire and then discover that you don’t have enough money to do the things you want to do. Nor would you want to put off retirement longer than necessary because you’re not sure how much you actually need.
You might find that the Retirement Cashflow Projection tells you that you simply can’t afford to live that lifestyle. That’s where one looks at whether to delay retirement or choose a lower lifestyle. The end goal of the projections is to get to a point where your goals are achievable.
The better job you do with figuring your needs, the better and more realistic your Retirement Cashflow Projection will be. And the custom built portfolio that we build for you will then be better suited to grow to meet your needs through time.
Once you’ve priced out your retirement activities and know exactly how much you need to save, you’re in a better position to take full advantage of tax-sheltered retirement plans like RRSPs, spousal RRSPs, TFSAs, pension plans, supplemental pension plans and other incentives that might be available to you.
If you’re interested in getting your dreams in focus and making them a reality, please call: (604) 288-2083 or email me: Steve@lycosasset.com.