The finish line is just around the corner; what should you be doing as you approach retirement? Here are 5 steps to an easy retirement plan
1. Determine how you want to spend your time?
In my experience, there are two reasons people choose to retire.
- I want to do X, Y, and Z while I have my health
- I’ve had it with my job
If you are part of the latter, I would strongly encourage you to take some time and think of the things you want to do in retirement.
I’m talking blue sky, anything that comes to your mind
- Travel
- Golf
- Buy a cabin
- Volunteer
- Complete renovations
So on and so forth
2. How much will your lifestyle cost you?
Now that you know what you want to do in retirement, how much will it cost to have your desired lifestyle?
Most people will have a reasonably good grasp on their day-to-day costs as those won’t change very much once you are retired.
On the other hand, let’s say you wanted to travel, what would that look like?
Are we talking a couple of months in Phoenix every winter, or are we looking to traveling the world? Those costs will vary significantly.
It’s also important to set timelines. For example, Judy wants to do all her traveling before age 75, and her lifestyle cost will be $75,000 per year. After age 75, Judy will no longer be traveling, so her lifestyle will only cost $50,000 per year.
3. Make a plan
With the help of a Certified Financial Planner (CFP), it’s time to see if your retirement plans are feasible.
If it’s determined that you’re on track to achieve your goals, great! What changes can you implement to achieve your goals even sooner?
If you’re not on track, what adjustments can be made to make your retirement goals a reality? For example, if Judy isn’t on track, the CFP might suggest she work for an extra year or do her traveling until she’s 73.
One way or the other, the benefit of making a plan is actually knowing where you stand in terms of your goals.
4. Optimize
It’s one thing to put together a plan, but a skilled CFP will be able to optimize it even further.
For example, they can help determine:
- How to tax-efficiently draw down your retirement assets such as RRSPs, TFSAs, Locked-in Accounts…
- The best time to apply for your Canada Pension Plan and Old Age Security
- How to structure your retirement portfolio to ensure tax-efficiency
- The best way to help your kids or favorite charities
5. Maintain
Once a plan is in place, it will unfortunately not act as a road map for the next 30 years.
Things will invariably change as you go along, such as the tax code, your health, and your goals.
I would argue that a plan becomes obsolete within a year. Hence why it’s essential to regularly update your plan to stay up to date and on track to reach your goals.
Have questions about your retirement plan? Get in touch with Marc below.
