Financial planning and your retirement: Are you ready?

Alvin Toll BSW, CFP
Counsellor, Employee Assistance Program
May 2, 2021

Retirement planning leads to many questions:

  • Can I afford to retire?
  • What will my pension provide?
  • Will government sources help me?
  • Have I saved and invested wisely?
  • How will I spend my time?

I have adopted the following definition of retirement “Do what you want to do, when you want to do it!” But how do you get there? The purpose of this article is to demystify the retirement planning process, and to demonstrate that proper planning for your retirement can reduce your stress levels and improve your emotional well-being. Exploring how you will live securely and comfortably, in addition to being financially confident, is most important.

Most people are trying to balance today’s needs with goals for their future. The financial planning process determines how you can best meet your long-term goals through the proper management of your financial affairs today. People who plan are more likely to achieve their goals and feel more prepared to deal with the unexpected. When it comes to retirement goal setting, a few principles apply:

Set measurable goals. Specific targets will help you achieve what you want. Include short, medium- and long-term goals. (Short - up to one year;medium - one to five;and long - greater than five years.)

Be patient. No matter how good your plan is, you won’t meet all your goals overnight.

Be you. Life goals are unique to each of us;reflect on your retirement with this in mind. What worked for a friend or family member might not fit for you.

Look at the big picture. Consider career, spending, family needs and other factors. Decisions you make in one area affect other areas of your life. Your retirement picture involves tax and estate planning, budgeting, and the proper management of your savings and debt. The key to success is fitting the pieces together to meet your goals and objectives.

As you pursue your retirement preparations, you might discover retirement is cheaper than you think. Forecasting what a decent retirement will cost depends on many personal factors, but there are some general guidelines.  

A look at the numbers. Many financial advisors have suggested people require 70-80% of their pre-retirement earnings when they move on to the next phase. However, retirement expert Malcolm Hamilton of the C.D. Howe Institute is of the opinion that replacing 50-60% is usually sufficient for most couples to maintain their standard of living as expenses are often reduced by the elimination of work-related costs, grown children, little to no mortgage, etc. (Single people should plan on 60-70%.) These numbers won’t lead to a lavish retirement, simply a level of comfort much like the rest of your life.

In a survey of house-holding spending by Statistics Canada in 2019, on average, senior couples spent a combined $64,461/year, or approximately $5,371/month. Single seniors generally need to spend more than half of this number per person. Many Manitoban seniors spend less than the reported Canadian average when they have little to no debt.

Benefit and pension sources. Many people have a company pension plan or have accumulated savings as they enter their retirement years. Government benefits such as Old Age Security (OAS) and Canada Pension Plan (CPP) are payable to most Canadians at age 65.

With good information and a clear plan, retirement can be more affordable than you think. Do your best to calculate your spending needs in retirement and compare the number to the after-tax income from all revenue sources. A certified financial planner can help you create a plan that meets your needs and goals. Your stress levels will be reduced and you will be better prepared to “do what you want to do, when you want to do it.”

Need help dealing with financial stress or retirement concerns? Manitoba Blue Cross's counselling services are available to all Manitobans, regardless of whether or not you have coverage with Manitoba Blue Cross. Find the available support that's right for you here.
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