It seems strange to talk about an end to summer when the weather this year didn’t really feel like summer. However, as the sun starts to set earlier in the day many of us will use the quieter days to think about what it will be like when the sun sets on our career. Sadly, only a minority of Canadians put together comprehensive retirement plans and, of those, less than half will revisit those plans regularly. As I tell people it’s okay to have an aversion to budgeting and planning as this is normal, yet plan we must if we want to have a retirement lifestyle that we can be happy with.
Surprisingly, the easy part of this exercise is doing the calculations. Assembling things like pension information, CPP and OAS eligibility and other sources of income in retirement is quite simple. The difficulty for some is figuring out exactly what retirement will look like, beginning with when you want to start. Some will spend less in retirement than they did when they worked, while others may choose to boost their spending to meet other objectives, such as increased travel and new hobbies. I encourage individuals and couples to sit back and really think hard about the subjective aspects of retirement and then attach dollars to those aspects where they can. This then gives them a realistic vision of what retirement will cost.
From there it’s a matter of seeing whether your expected income streams can cover these expenditures and, if not, how large of a retirement nest egg you will need to create the necessary cash flow. This will include your RRSPs, LIRAs, TFSAs, regular investment accounts and even the wealth you have generated in a business or corporation. Again, this does not have to be a difficult analysis and once done you will have a good blueprint with which to plan your retirement. But I cannot emphasize enough the ‘soft’ details about retirement planning. Staying healthy, knowing what you want to do the day after you step away from work and whether or not this is just a transition into another career. Everything should be on the table so that your retirement sunset is as golden as the ones you see this month.
By Andrew Pyle, MA, CFP, CIM, FMA, FCSI
Senior Wealth Advisor and Portfolio Manager, Scotia McLeod
The Pyle Group, www.pylegroup.ca