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What are your retirement plans?
Many of us look forward to retirement and a change in routine. Not all of us, however, have a clear idea of what that new routine will look like.
Before you can get a full picture of your post-retirement life, you need to define your priorities, your interests and your financial situation. Here are few questions to ask yourself.
Where do you want to live?
- Do you want to stay in your current home, or downsize?
- Do you want to stay in the same neighbourhood, or move closer to family or to a community with more amenities or milder weather?
What activities do you enjoy?
- How do you plan to spend your days? You may be thinking about joining social clubs, spending time with family, pursuing a hobby or attending cultural events.
- Are you interested in enriching your education by taking courses or attending lectures?
- Are there seasonal activities that interest you, such as curling in winter or gardening in summer?
- What sports or physical activity can you include? Jim Yih, an Edmonton financial advisor who specializes in retirement, advises in an article: “Make sure you take the time to exercise, eat better and get frequent checkups. Money won’t mean a lot if you do not have the health to enjoy it.”
What about big projects?
Now that you have more free time for bigger projects, you might be considering some major expenses.
- Are you planning to renovate—for example, updating your kitchen or making changes to help you age in place?
- Do you intend to travel?
- If you have decided to live somewhere else, what are the costs of moving and fixing up your new home?
What responsibilities will you have?
- Will you be caring for an elderly parent or babysitting grandchildren?
- Are you helping out any family members financially?
- Will you still have debt or a mortgage after retirement?
- Do you or your spouse have health problems that require attention?
How will your income change after retirement?
- You may be accustomed to one source of income during your employment years. After retirement, you may have multiple sources to consider such as pensions, investments, old age supplements and part-time or casual work.
- After retirement, you may be able to keep a higher percentage of your income, with less of it going to pay taxes (if you are in a lower marginal tax rate in retirement), employment insurance or pension contributions.
- Your health coverage may change, depending on your pension plan. This means certain medical expenses, such as dental care, may increase.
- Other expenses may decrease when you’re no longer working, such as clothing, restaurant lunches and commuting costs.
- If you’re over 60 or 65, you may be eligible for seniors’ discounts on things like admission fees and public transit.
Remember, many retirement projects and ideas have costs associated with them. That’s why planning ahead is important. Consider what your net assets and expenses are now, and what they’ll be when you retire. Be sure to have a savings strategy in place that will give you the funds you need when the time comes.
When you’re planning your retirement, remember that your money needs to last. The Financial Consumer Agency of Canada recommends that people budget for at least 30 years of retirement. Canadians are living longer than ever—you should plan to enjoy it!