So you’re thinking about retirement. It may sound good; however, it can also be an emotional and stressful time of life. You begin to dream of playing golf every day, travelling the world, or just sitting back and relaxing. But there are other forces that will come into play.
You must be prepared for retirement both financially as well as emotionally. This is a process that takes time and planning. You don’t want to be making important financial decisions when you are stressed out or emotional. That is why planning and preparation are vitally important when getting ready for this new stage of life.
Close your eyes for a moment and try to imagine what your retirement will look like. Visualize a typical day in retirement. What will you do, where will you be doing it, and who will you be doing it with? The answers to these questions will begin to put a framework around your desired retirement income needs.
Retirement today is quite different from years gone by. Before, when one retired at age 65, the planning horizon was for 5 or so years. Today, with modern medicine, healthy lifestyles, and early retirement options, we may be preparing for up to 30 years in retirement. This is an enormous financial planning task.
Consider the sources of income that you will have to meet your retirement income needs. The main sources of income at retirement include government and private pensions and savings. If you come up short, you can always return to work. Many retirees are forced to work to make ends meet. Others choose to work to keep busy, and the extra money is a bonus. The idea is that if you plan your affairs accordingly you will have the option to work, which is always a much better situation, than being forced to work to keep food on the table.
Anxiety tends to build as one approaches retirement. Questions such as, “How should I invest my money?”, or “Do I really have enough money to retire?”, may come up. These doubts have the propensity to build stress. Other stressors may include the loss of identity. Many of us are defined by the work we do. Losing that identity can be an emotional, as well as stressful experience.
In the old days, the way to deal with the stress of making investment decisions was to convert all assets into guaranteed investments. Today, with retirement stretching over a potentially much longer period of time, this approach is no longer appropriate. If you need 4 to 5% of your capital to live and the guaranteed investment only pays 2%, you are guaranteed to deplete your capital each and every year. And we haven’t factored in inflation or other unexpected expenses that can further drain your capital.
With proper planning and sound decision making, you will cruise with confidence into your retirement lifestyle. Much of the stress will be removed because you have planned your savings to meet your income needs. The key is to establish your plan, commit to it, and monitor your progress.
The foregoing is for general information purposes and is the opinion of the writer. This information is not intended to provide personal advice including, without limitation, investment, financial, legal, accounting or tax advice. Please call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., to discuss your particular circumstances or suggest a topic for future articles at 613-798-2421 or E-mail firstname.lastname@example.org. Mutual Funds provided through FundEX Investments Inc.