by Viola Van de Ruyt –
Whether you are still working and planning toward retirement or currently retired, it is important to give your retirement plan a “regular checkup.” As retirement can last 30 years or more, do you have enough resources and a spending plan that will ensure you don’t run out of money? What about psychologically – are you ready with plans on how you’ll spend your time and who you’ll spend it with?
When retirement benefits for people turning 65 were first created, that was the average life expectancy. People literally worked until they passed away. The concept of 30 years of not working for the average person did not exist.
There are five big risks to your retirement plan not lasting:
1. Withdrawls – too much, too soon
2. Healthcare – health-related financial expenses
3. Inflation – increase in price of goods and service each year
4. Longevity – will you live longer than your resources
5. Asset allocation – too conservative for the other
four risks or too aggressive
Just thinking about these risks can be so overwhelming that it results in no action for some people. Instead of judging yourself about the mistakes you’ve made or the opportunities you’ve missed, why not try some compassion with yourself. Start by tracking what you spend; any method is fine, but you do need to include everything. Importantly, at this step it’s just record keeping, no decisions. Don’t forget the big annual ones like car insurance.
Take it step by step. First: what are the essential expenditures? This will vary from person to person, but determine what is necessary for basic living. Then the rest is lifestyle. This is where you will look at what will be your retirement activities. For example: tennis at a neighbourhood outdoor court versus a golf club membership have a very different cost, even though both are active and social. Some quiet contemplation of your lifestyle for this next phase of your life will be helpful.
The next steps will involve determining if you can afford your desired lifestyle, but this is the step where you need unbiased advice.
You can’t change the past but you can change your future. Money and finance are very emotionally charged, with feelings from childhood, divorce etc. clouding your judgement. This is the main reason you need professional advice. Finding an advisor that you can trust is the next and best step you can make for your “checkup.”
For more information visit www.violavanderuyt.ca.
“Viola Vanderuyt is an Investment Advisor with National Bank Financial (NBF). National Bank Financial – Wealth Management (NBFWM) is a division of National Bank Financial Inc. (NBF Inc.), as well as a trademark owned by National Bank of Canada (NBC) that is used under license by NBF Inc. NBF Inc. is a member of the Investment Industry Regulatory Organization of Canada (IIROC) and the Canadian Investor Protection Fund (CIPF), and is a wholly-owned subsidiary of NBC, a public company listed on the Toronto Stock Exchange (TSX: NA).”