We all want to have a happy retirement. Who doesn’t? Here are 10 things to think about when planning your retirement whether it is imminent or far off into the future that may help.
1 .Plan well ahead. If some of your retirement income depends on market performance, then planning ahead is crucial. Weird things can happen in markets that can be drastic. Markets do not like uncertainty and will react negatively. It could be a short lived thing or it can drag on for a long time. Your financial advisor needs to be on the same page as you are. Make sure you are working together. Ensure your advisor is aware of any decisions on when you will retire, and what pensions you will have so that he/she can take the appropriate action regarding your investments at the appropriate times. It is never too early to start planning.
2. Be informed. If some of your retirement income will come from pensions, investigate what that will look like. Be informed about your pension plan with your employer and understand it. As above, your financial advisor and/or accountant can help. You can also get information from Revenue Canada regarding your CPP/OAS and whether taking CPP early makes sense for you. Perhaps it will make sense to take income from investments and delay your CPP. Get professional advice.
3. Be conservative. Better to be conservative because markets can be volatile. We have no way to be certain what future inflation will be or what future markets will be doing. One also never knows what unexpected issue with health or family may come up. I also think it is very important to address your borrowing power in retirement as well. Everyone needs somewhere to get some money quickly if an emergency arises. Don’t wait until the emergency has happened to run around looking for money. Have a line of credit available.
4. Diversify. Ensure your investments are diversified. As the saying goes, don’t have all your eggs in one basket. As above, markets can do weird things. This becomes more important than ever as you get closer to retiring. Talk to your advisor and understand what kinds of investments you have.
5. Taxes. Understand tax implications of withdrawing from RSP’s, or selling assets that may trigger capital gains. Find out if pension clawbacks will affect you. You don’t want any surprises from Revenue Canada!
6. Think about your interests. Do you have hobbies or interests that will cost money? Whether it is plans to travel or pottery, woodworking or golf, it will all cost money. Think about budgets for those things. My husband went back to an old interest he had of rock hounding. He has always loved rocks and fossils. Great, I thought, that is a great hobby that won’t cost any money. Well that was a wrong assumption! He has bought no end of rock saws, and polishers and pieces of equipment I can’t tell you. Then he needed oil to run the rock saw. Then it’s new boots and rain gear. There are still other pieces of equipment he wants. Oh and a metal detector of course was purchased. Another reason to give this topic some consideration is you don’t want to end up sitting on the couch with nothing to do and end up depressed. Have plans! It is also important to have discussions with your spouse or partner about what you would like to do in retirement. Be supportive of each others interests. In our situation, I really want to travel and while my husband likes road trips especially when he can do some rock hounding along the way, he is not particularly fond of long airline trips to some of the places I want to go. But we have found a balance with this. He will come with me to the places I want to go and I will participate in his hobby.
7. Health. Leading a healthy lifestyle at this time of life is crucial to a long and productive retirement. All the money in the world is useless if you are not healthy. Stay active. A lot of retirees find a new interest in cooking. What was a chore when working can turn into a great hobby once retired. It is a great time to learn new ways to cook including healthy ways of cooking and eating. Also challenge yourself. Maybe there is something you have wanted to get back to or get better at. There is a saying something like “use it or lose it”. Find ways to stay sharp whether it is learning a new skill, language or using the skills you already have by volunteering somewhere that interests you. Do something that matters to you. Keeping your spirits up is also important. See a professional if you find you are down in the dumps. This is also a time to concentrate on yourself and have some “me” time.
8. Balance. Balance wants and needs. Appreciate what you have. You don’t have to be rich to enjoy retirement. We certainly are not rolling in dough. But for me a priority is the travel. So do I need new furniture or new hardwood or marble bathrooms? No, I would rather travel. But I do appreciate my home without all the fancy stuff. I have tried to find ways through DIY and vintage shopping to make my home special. (At least to me!) I have always been a reader, but in my last few years of working I found that by the end of the day I couldn’t seem to concentrate on reading anything for more than 5 minutes. Now in retirement, I have gone back to my love of reading. Great! But to be constantly ordering books for my ereader is costing way too much. So down to the public library. I learned that I can get books through the library on my ereader! We are finding ways to balance out our travel spending by saving on other things.
9. Relationships. Having healthy relationships in retirement is very important. To go from having lots of people around to solitude can lead to depression. Cultivate relationships with like minded people and work on those relationships. Keep up with existing friends and make new friends. This takes work and like anything else in life you will get out of it what you put into it.
10. Housing. Give some thought to where you will live well ahead. Will you stay put or downsize? Sell your home and rent or move to a different city? City or country living? Do you feel you need to live near your children or not? The housing part of the whole equation was an important factor for us. We chose to sell our home and purchase a less expensive one just 30 minutes away from our community. The lower price point was huge for us. But we stayed close enough so that we can go there any time to visit my elderly parents or care for them when and if that becomes necessary. I can also keep up relationships with friends which is important. But if we had to move farther away in order to achieve our financial goal of a less expensive home, would we have? Probably. This may not be for everyone but it worked for us for sure.
These are just a few things to think about when planning your retirement. I think the biggest thing is to have plans. Hit the ground running so to speak. No regrets. A lot of successful retirees often say that they are so busy they don’t know how they had time to work. Keeping busy is super important. I don’t think it matters what you do. Just be busy! Make every day count and live your retirement life to the max!