Although this study focused on the financial aspects of retirement, it is important to remember that there are many other non-financial considerations. These include hobbies, volunteerism, fitness, lifestyle and travel, just to name a few. These may, or may not, have a significant financial consideration. It is equally important to have plans for these aspects of retirement life.
The survey of 2,200 Canadians found that only 40% of people in their first year of retirement felt comfortable with their retirement savings. This number dropped to 29% for those in their second year of retirement. However, confidence takes hold by the fifth year, when 58% said they were comfortable about their finances and after ten years 80% were comfortable about their financial future.
Once retirees settle into their new situation they tended to live within their means. They started to feel better once they figured out how much money they actually needed to meet their retirement goals and lifestyle needs. This study showed that many retirees were quite comfortable living on 60% of pre-retirement income. Many previous studies told us that the figure was closer to 75% or more. This may have been partly the cause of uncertainty and concern for those who were about to be, or newly retired.
In order to reduce some of this stress it is important for Canadians to prepare a retirement income projection before retiring. This allows for realistic planning rather than unrealistic dreaming. It will show the financial health of one’s retirement lifestyle desires. Only then can one relax and settle into their new situation.
The study also found that professional financial advice played a vital role in one’s comfort level, both before and after retirement. People who worked with a financial planner had a higher level of financial confidence and felt better about their financial health than people who did not use a planner.
Financial planners have an abundance of calculators and tools to assist with the planning process. Speak to your financial planner about your retirement income projection. Specialized computer programs are used to assist with these calculations. The result is a projection based on best and worst case scenarios. The work will be worth peace of mind and a stress reduced retirement.
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., of FundEX Investments Inc. to discuss your particular circumstances or suggest a topic for future articles, at 613-798-2421 or e-mail rick@invested-interest.ca.