Achieving a successful retirement is about more than reaching the podium of financial security that enables you to make this important life change. Your quality of life in retirement will also have a great deal to do with how you live your life and why. Successfully transitioning to and living through the retirement of your dreams is all about preparation and planning. Here are five questions to consider to help put the “gold” in your “golden years”.
Building and drawing on your “pot of gold”
Most aspiring retirees tend to focus on the financial aspects of retirement, which is certainly a very important part of a successful retirement plan. Government support programs – like Old Age Security (OAS) and the Canada Pension Plan (or the Quebec Pension Plan) – are in place to help most Canadians meet at least some of their new life-stage cashflow needs. Private pension plans are also an important source of income for many, although they have become rarer over the last few decades. But even with these programs, many Canadians still need to consider how they will fund their retirements.
Those who have planned, saved, invested, and grown their savings through their investment portfolios over time, while taking advantage of the powerful compounding and tax benefits of government-sponsored savings accounts like Registered Retirement Savings Plans (RRSPs) and Tax-Free Savings Accounts (TFSAs), tend to be better prepared and positioned to see their retirement financial goals achieved.
Importantly, working with an advisor can help ensure that you build a realistic and personalized plan that reflects your circumstances and unique goals, while managing your risk and thoughtfully building your wealth over time. Starting early and using the power of compounding, while protecting your assets from unnecessary taxation, are just some of the ways that a wealth plan can help you maximize your savings and hard work to support your golden years.
Finding your path in retirement
However, often overlooked in the retirement planning process is the importance of one’s quality of life. According to a 2021 report from RBC Wealth Management, few retirees find that their retirement happiness or satisfaction is predicated on their financial circumstances. Most retirees find they have enough or even more than enough income to meet their needs, but instead have a hard time making the shift from working to not working, and from saving to spending their savings. Often, what they thought in pre-retirement were going to be their biggest worries were quite different after retiring.
Reaching the retirement podium is about planning and preparation
Planning for retirement can start at any time. Here are five questions to ask yourself as you plan and prepare for your desired retirement lifestyle:
- Do I have a retirement plan in place? If not, it’s helpful to remember the adage “The difference between a dream and a goal is a plan.” If your answer is yes, great – be sure to revisit it frequently and discuss it with your advisor regularly to help you remain on track to achieving your goals. Does your plan:
- Address how much you need to live on in retirement?
- Maximize tax efficiency?
- Work to protect you against inflation over time?
- Provide flexibility and resiliency in the face of unexpected expenses, replacements (e.g., car, home repairs) and/or health issues?
- Generate sufficient cashflow to meet your needs when you need it?
- What will be my focus in retirement? Many retirees imagine that they will travel or play golf all day, every day. The reality can be quite different, and as retirement can be a very long life stage, one’s pastimes can change significantly – especially depending on one’s health. Consider incorporating other focuses, such as family, exercise and health, charity, community involvement, hobbies and passions, or even work, as one’s purpose in life is critically important in determining your quality of life.
- Do I plan to stop working entirely in retirement? Many retirees decide to go back to work, or to work part time. It’s often not for the money, but rather to have a purpose and to remain socialized. Do you have skills that you can transfer into retirement? Where and how you live will often determine what kind of work you’re focused on, so that might be a consideration when deciding where to reside in retirement (i.e., urban vs. rural, large city vs. small town).
- Is aging in place my happy space? Many retirees begin their new life chapter imagining that they will remain in their present home, or that the decision to leave will be theirs alone when the time comes. Life has a way of throwing curve balls, so thinking ahead to what might happen as health or financial circumstances change is important. Proximity to health care or social services can also be a consideration, as can increasing costs to maintaining a residence.
- What is my legacy? It’s important at any point in life to ensure you have your estate organized, especially a Will and Powers of Attorney for financial and healthcare decisions. Making sure your loved ones and/or healthcare providers know your wishes regarding your care is an important part of how you live out the latter part of your life. Considering your legacy – what’s important to you to leave behind for your family or charity – is also an important factor in knowing you have a plan in place and can enjoy your remaining years with peace of mind.
Reaching for gold – we can help
Spending time today to help ensure your tomorrow is what you want it to be is a big part of successfully achieving your goals. As is having wealth and retirement plans that properly capture both your financial and lifestyle needs. We’ve got the expertise and resources to help you reach the retirement lifestyle you have worked hard to achieve. Talk to us today.
This information is not intended as nor does it constitute tax or legal advice. Readers should consult their own lawyer, accountant or other professional advisor when planning to implement a strategy. This information is not investment advice and should be used only in conjunction with a discussion with your RBC Dominion Securities Inc. Investment Advisor. This will ensure that your own circumstances have been considered properly and that action is taken on the latest available information. The information contained herein has been obtained from sources believed to be reliable at the time obtained but neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers can guarantee its accuracy or completeness. This report is not and under no circumstances is to be construed as an offer to sell or the solicitation of an offer to buy any securities. This report is furnished on the basis and understanding that neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers is to be under any responsibility or liability whatsoever in respect thereof. The inventories of RBC Dominion Securities Inc. may from time to time include securities mentioned herein. RBC Dominion Securities Inc.* and Royal Bank of Canada are separate corporate entities which are affiliated. *Member-Canadian Investor Protection Fund. RBC Dominion Securities Inc. is a member company of RBC Wealth Management, a business segment of Royal Bank of Canada. ® / TM Trademark(s) of Royal Bank of Canada. Used under license.