GCCIBlog, Financial Planning, Retirement Issues and more

Everyone wants to have a comfortable retirement, a healthy retirement and to be able to take advantage of the free time they now have.  The fundamentals of meeting these goals is pretty straightforward:

• Sufficient funds to do the things you have always wanted to do
• Healthy bodies and minds
• Interesting and challenging things to do

If you have these three things, chances are all of the details will work themselves out and you will have a wonderful retirement. Sure there will be challenges along the way, family issues to deal with and surprises that you could not predict. However if you have dealt with the retirement planning issues of money, health and interests, you should be able to weather these small storms.

Let’s take a look at these three areas in more detail.

Sufficient Funds

The answer for everyone is of course different. You need to have sufficient funds in your retirement to meet you basic needs for a safe and healthy life. Beyond that is what you really need to enable you to meet the retirement goals you have.  Starting when you are younger and setting aside at least 10% of your salary every year in savings should get you to were you want to be when you are ready to retire.

Of course if you have lofty goals in mind , you will have to save more. Develop a plan based on your current lifestyle and spending habits. Calculate how much money you will need to save based on the year you will retire and the expected life span. Assume a conservative interest rate as well which will force you to save a bit more. With these basic tools you and plans you should find yourself in a good position come retirement.

Follow the basic rules of : diversify your investments, never put all of your investments in one basket, if it sounds too good to be true , then it probably is, and try not to chase speculative investments, invest for the long term.

Healthy Bodies and Minds

This is probably the easiest for many people. All you need to do is exercise the body as well as the mind to stay sharp and enable you to enjoy all of the things that life has to offer well into your old age. Too much of a good thing is also bad, so 3 days of exercise during the week for 30 minutes each time is probably sufficient for most people. Overdoing it, as in seven days a week marathon running for example is probably going to wear out your joints well before you normally would. Who wants to go through knee or hip operations with the associated immobility?

Swimming is an excellent low impact exercise and is great for sore knees and hips. Even if you are not a good swimmer, just getting out and being active in the pool is a great exercise. Consider some of the swim gym classes as well were you exercise in the water.

You also need to challenge the mind and keep it sharp. Working will help with this as long as your job requires some thought. Experts indicate that doing crossword puzzles, playing games, working on various projects will also help to keep the mind sharp. How about doing math to keep your mathematical skills high. You can impress the kids at the store by adding up your costs before they can punch it into the cash register. Did you ever notice that when the cash register is not working, most have no idea how to add!

Interesting and Challenging things to Do

If you catch yourself becoming a couch potato, you are probably headed in the wrong direction. One friend of mind, when asked what he was doing in retirement, he answered by saying he gets up in the morning, has his coffee, reads the paper and watches the grass grow! This is an indicator of someone who has no outside interests and is bored. Needless to say his friends were appalled. Fortunately for him, he was able to land some small contracts which will keep him going for a while, however he really needs to fine something interesting and challenging to occupy his time.

It really does not matter what it is. Go back to work, take up some hobbies, volunteer, travel, do something. The only important criteria is to make sure that you look forward to getting up in the morning to tackle what you have planned for the day. Of course if travel is on your list, you also need to be able to afford it as well.

Don’t wait start planning for your retirement when you are young and you will be sure to have a very successful enjoyable retirement lifestyle! Comments are welcome!

I read an article recently called early retirement secrets which gave the following short list of things to do if you wanted to make sure that you would be able to retire early. I looked at this list and thought that it was ok, but a little academic. Having gone through some of what they discussed and identified, I have my own thoughts about this subject and what you need to do to retire early. First I would like to offer some comments about each of these points.

• Visualize What Retirement will be like
• Beat the Other Guy
• Use Reminders and Checklists
• Plan in Bite Size Chunks
• Consider Annuities
• Your Going to Have Some Losses
• Protect Yourself – Do Not be Too Trusting

Visualize What Retirement will be like – It is impossible to visualize what retirement will be like, unless you have some role models to follow and you are in the same circumstances as these role models. Still you are a different person, so do your best at figuring out what you really want to do in retirement and be realistic about it as well. For example, you will probably want to travel, but you cannot travel all of the time. You have health issues to consider and grandchildren as well to think about.

Beat the Other Guy – Simply do not worry about what the other guy is doing, do what is going to provide you with a happy good quality lifestyle. Competing with the Jones (sorry, this is a really old expression) is just a losing situation. Focus on yourself and your family.

Use Reminders and Checklists - it is a good idea to follow up on your investments on a regular basis. You probably would do this as part of your job so why not do the same thing for your personal life.

Plan in Bite Size Chunks – planning in stages is also a good thing, especially if you are the type that cannot focus on the big picture. Set milestones, achieve those milestones and then set new ones which will take you to your final objective.

Consider Annuities - I am not a big fan of annuities. They are just a way for the insurance companies and banks to make more money off you.

Your Going to Have Some Losses - This is very true. During the recession many people lost huge amounts and then recovered these same amounts provided they well invested in good quality stocks, bonds and mutual funds. Non of this speculative stuff and well diversified.

Protect Yourself - Do Not be Too Trusting – Always get several opinions and if it sounds too good to be true then it probably is. Most people should have at least 2 financial advisers and they should ask the same questions of both to see what kind of answers they give.

All of the above are excellent points, however as I mentioned earlier a bit academic for a lot of people. The reason I say this is many people do not even know how to get started planning for their retirement and end up retiring without a clue about what they are going to do with their time or if they even have enough money to live on! So what should someone do on a practical basis to prepare for retirement? Here are a few ideas which if followed, will get you ready for retirement. They worked for me.

• Save 10% of your salary every year
• Develop multiple  hobbies that will carry into retirement
• Work at a job you enjoy
• Try semi Retirement first
• Always have a Rainy Day Fund
• Always take A Vacation
• Exercise

Save 10% of your salary every year - Save it and do not touch this money regardless of your needs. Get used to living on 90% and invest this money conservatively with some diversity so that you can manage the ups and downs of the markets.
Develop multiple  hobbies that will carry into retirement – This is really to help you find a balance between work and personal life, as well as give you something to do when you finally do retire.  A neighbor of mine told me the other day that he gets up in the morning and watches the grass grow. He has no hobbies and I feel sorry for him.
Work at a job you enjoy – This is a must, because if you like the job, you will do a good job at it and excel. Less chance of being laid off and you will be much happier as well which leads to a healthy lifestyle.
Try semi Retirement First – For some people this is really too risky, however for others working part time or on full time short term contracts is the best of all worlds.  A short term contract gives you some extra money in addition to your retirement income, keeps your hand in the business, allows you to meet more people and challenges you as well which keeps the brain sharp. I like short term contracts since this allows us to travel and do some of the things a short vacation would not allow.
Always have a Rainy Day Fund - Let’s face it in today’s world, your going to lose your job someday when you least expect it. You may have a boss who does not like you, your company may get into financial trouble or you just fed up and quit. A rainy day fund, separate from your retirement fund, will tide you over until you find something else and take the pressure off as well.
Always take A Vacation - This appears to be a small thing, but it is important to always take that vacation. If nothing else you will learn what you need to do to keep yourself occupied when you retire. I know guys who cannot wait to get back to work after their vacation because they are bored.  This is the wrong approach. Use this time to train for retirement!

Exercise - both the body and the brain to stay fit and healthy.

Hope fully these tidbits will help someone. If you have comments, please leave them as long as they will help our readers.

As Canadians age, transition and live in retirement, taking control of their health and wealth is critical to ensuring success in the later stages of life.  Many of us are trying to figure out what we want to do in the next stage of our live. Some of us are about to retire or have retired. Still others retired from their long term careers and are working on a part time basis or on a contract basis at various jobs. They call this semi-retirement, since they have not stopped working yet they have retired from their career jobs. This transition, regardless of what you chose to do or how you plan it needs to be thought out carefully, taking into account your family needs as well as your personal needs. This includes financial health, but also your physical health as well.

“There are three major aspects of your physical health that deteriorate with age – your strength, endurance and flexibility and let’s not forget your cognitive abilities as well. Declines in these areas can lead to loss of quality of life and disability that may to increase with aging. Many people can significantly slow down the decline in each of these factors by taking control of your lifestyle. So you have to pay attention to your finances to make sure you have enough to live on, but you also must pay attention to your overall health as well.

Many Canadians are allowing their physical capabilities to decline at a higher rate than what is attributable to the result of aging. Staying active, strengthens the heart, the lungs and the muscles and keeps strong blood flow to the brain. Even if you go for a brisk walk daily, this can make a huge difference in your cardio levels and extend you life by years.

Some age-associated changes are within one’s control, and can be slowed by staying active and making small lifestyle changes. An increase in physical activity at any age is known to reduce age dependent declines in fitness and can help prevent diseases that are normally associated with aging.  Diet is also important as well. Eating well, without over eating and maintaining the weight for your body type is important. Overweight people tend to age more quickly so maintaining proper weight levels, exercising regularly as well will help you maintain your health.

Paying attention to your finances is equally important. The many demands of life can make it difficult to take full advantage of the power of saving and investing money over the long-term. While consumers  may be tempted to ignore the details and deal with retirement financial challenges as they arise, a successful retirement can be attained by taking a few simple steps to determine in advance if their financial capital is adequate. Do the same with your overall health as well and take steps to prolong your life.

The key to a successful retirement isn’t about setting a plan in motion; it’s about building a plan that is dynamic and holistic so as your life changes and your health changes, your financial plan evolves and preserves your money in a way that fits your lifestyle. Much like physical health, action must be taken to maintain strength, endurance, and flexibility in one’s financial health. It is the combination of control over one’s health and finances that leads to a balanced retirement.

Stay on track and build a plan today. Follow these simple steps to a successful retirement.

• Write down your plan. Writing down your physical and financial goals helps you clarify them and gives you something to work towards.
• Assess your progress. On a quarterly, semi-annual or annual basis, step back and see whether you have achieved the goals that you set for yourself.
• Make modifications, as needed. A plan is flexible and can evolve as your needs change.

You are the only one who can really take control of your health and your financial plan. Talk to experts to help you fine tune your plan for exercise as well as to save sufficient money for your retirement. However do not follow advice blindly, make your own decisions and remember:

• If it sounds too good to be true, it probably is
• Never put all of your eggs in one basket, diversify

Please leave comments on your plans and how our readers can benefit from your ideas as well.

Working past 65! let alone 70 is becoming a reality for more people than we care to think about. Due to the recession over the past two years and many people losing their jobs, their homes and their savings, it has become an unfortunate reality. Perhaps you have already noticed that there are more and more seniors working in the service industry. You see them at fast food outlets, stores even good old Walmart.

The problem is a common one in the arena of personal finance. If you are approaching the age at which you’ve planned to retire, but find that you don’t have enough money saved, do you have a plan? Are you going to work longer. Can you work longer is another question for many people as well. They may not physically be able to work as long as they want to. If you find yourself in this situation and have some ideas, please leave a comment on our blog. We all need some advice and just sometimes the experts have it wrong. Good old common sense sometimes is the best medicine for us all.

Other Solutions to Stretch those Dollars

If you are younger than 40, then you have lots of time to make up your losses and also save for retirement. If you are 55 , 60 or even 65 and lost a bundle during the recession, work and severe belt tightening is probably in order.  Also you may have to make some compromises as well, such as moving in with the kids or even a good friend to share expenses. Financial planners do not usually talk about these solutions since there is no business for them  and they cannot generate any income from you. However sharing expenses like we did when we were teenagers and young adults may be the way of the future for many older adults on a tight budget.

One has to be very careful if you are going to enter into this type of arrangement. There are many desperate people who would not hesitate to take advantage of someone. In addition, compatibility is a very important element that is increasingly important as you get older. We all spend more time at home as we age, which means you spend more time with the person you are sharing with. Being compatible is extremely important to ensure a harmonious lifestyle.

Sometimes Working Beyond 55 is not Realistic!

If you have your health, and can continue to work in the same environment that you are use to, then working for a longer period is probably ok. But what if you cannot work in the same job, then what do you do?

For example if you have a physically demanding job, you may not be able to continue with this type of work into your 60′s. We all get bad knees, bad hips, backs and as a general rule have less energy. Doing a construction job may mean that you just cannot do it until the age that you planned on.

It could also mean that you need to retrain yourself and switch to another profession as a result. Teaching yourself and taking courses takes time and money, but thousands of people do this every year. You can train for that new job and in some cases continue in your new profession well into your 70′s.  Financial advisers, insurance agents and many other similar types of jobs are well positioned in this way.

Stay on top of Trends

What ever profession you have, it is important to stay current. Additional training and self teaching is an absolute must. You should think about learning something new each and every day to avoid becoming out of date with your job and with younger competitors. If you are a computer programmer, learn new programs, stay current with technology and all of the latest buzzwords. If you are in fashion design, every year brings something new, so you got to stay on top of your game.

On the other hand if you just need a little bit to survive and to top up your retirement income, you may want to consider a low stress job that gets you out and mingling with people. This brings us to our last major topic. How does one prepare for retirement?

What’s the best way to manage preparing for retirement.

Plan, plan and then plan some more. Every 6 months you should be evaluating your retirement plans and have emergency plans set up so that if something does not work out just the way you thought, you will be able to adjust and utilize one of your backup plans.

This is so important. There is no one set plan or recommendation since we are different, have different needs and objectives. However if you spend some time evaluating yourself and your needs, and then take action to achieve your plans, you might be ok. Whatever you do, don’t depend on anyone else but yourself to prepare for retirement. Not the government , your friends or your family and certainly not your company. They may or may not be around when it comes time for you to retire.

Take control of your life and begin to make your retirement plan today. Set some objectives and goals and work towards them.

Are you changing your own retirement planning to deal with the new realities? Please share by posting to comments. Spam comments will be auto deleted.

Remember the slogan ” Freedom 55″, you do not see that being advertised very much these days. Many people suffered greatly during the past 2 years through 2008 and 2009. If you did not lose your job, you lost a lot in the stock market and that usually means that Freedom 55 went out the window. So now you cannot retire when you planned, but maybe it is not that bad.

It turns out that there are many older workers that are not planning to stop working even if they have the money. Many people enjoy the challenge, they enjoy the camaraderie of working with people and they enjoy some of the fringe benefits that working offers. They have some where to go every day and something to look forward too. It turns out that before the recession really kicked in, many people were already planning to work beyond their normal retirement and it was not for the money. True many have to work now whether they want to or not, but with the benefits that come with the job, it may not be so bad.

Challenge of Not Retiring

Consider getting up in the morning and not knowing what you are going to do the rest of the day vs. going into work and meeting the challenges of your job. Some people would say you are nuts, you need to get a life and set your priorities. Believe it or not many people enjoy going to work, they enjoy the challenge of solving problems and dealing with issues that they can resolve. If your job involves a lot of stress, you may want to deal with this particular challenge and manage it so that the stress becomes manageable and enjoyable. We all need some stress in our lives.

Lots of people want to retire from their current job and move to something else. The changed environment is often a challenge, an enjoyable one and many people rekindle the spark that they might have lost in their current job.

Camaraderie of  Working

If you enjoy people and being around people, then you will miss your job unless you replace it with something else. Many people view their jobs as part of their social life ( they actually do work as well) because they have fun at their job and with the people they work with. Some will retire and then go back on contract to the same job and the same company. A lot of government workers seem to be able to do this quite easily at high rates of pay.  While some do this simply for the money, others do this because they love to work and they just do not see themselves spending time at home, golfing or traveling all of the time.

Fringe Benefits

There are also fringe benefits that go with work. Many people just go to work and do not have any real fringe benefits. However if you are a middle manager or senior executive your going to miss the power, the support you get from staff and the travel benefits. Quitting or retiring is tough for some who miss these fringe benefits. Even having somebody arrange your travel schedule for you can be a big issue for many executives. If you are used to having somebody do all of this for you, then it can be time consuming and confusing as well. Computer support is a big issue. Now you have to do your own, there is no one to set up and configure your computer or support you when you have a problem with your computer. The best advise is to learn how to do all of this stuff before you retire and be able to do most if it yourself!

Looking Forward to Going to Work

If you look forward to going to work, then you are enjoying work and all that it offers. Everyone is different. For some, work may offer the challenge they are looking for, for others it is just plain interesting. For many people they really like the social time at work were they interact with other people. This can be really important for many people if they do not have a lot of outside activities they participate in.

We know some people who have no hobbies and do not belong to any clubs. They do not go out much and as a result, work is the social outlet for them and the opportunity to interact with people. So if you really like going to work, then consider carefully what you will do after you retire and if you really need the outlet that work offers.

Self Worth

Self worth is also very important. Many people identify with their jobs and measure themselves and others by the type of job they do and the amount of money they earn. Once you retire this all goes away and you can only identify with your past achievements, unless you get involved in other activities such as volunteering and supporting organizations that help people. Unfortunately not every one can or wants to volunteer. If you are the type of person who really identifies with work and measures your self worth against the job, they you may not want to retire just yet.

Retirement is a very personal decision. Make your decision carefully. Work is good for all of us under the right conditions. If it is not fun it is time to change.

Feel free to leave your comments and suggestions that will help those who are getting ready for retirement. Spam comments will be deleted!

How does one go about figuring out if they haf sufficient funds saved up for retirement? Perhaps if you have a pension which will last until you die, you will be ok financially. Add government pensions and many people with pensions will be find. They may not be able to do everything they want, but they will be able to live comfortably. Baby boomers have become accustom to having whatever they want and they have the money to make purchases that their parents never could.

Now they are going to retire on mass and many of them do not have company pensions to fall back on. They have to rely on their own savings, odd jobs and government pensions which do not pay a lot compared to the cost of living these days. With so many people retiring at the same time, all of the financial companies are developing products that are designed to help the baby boomers. But are they really helping them?

All of these companies are in the business to make money and they have high overhead and that means they need to make a lot of money off of you and I to be profitable. If you are planning to retire soon and have some money to invest, be very careful how you invest and who you invest with. These funds need to last some time. So lets break the problem down for people in general terms so that you can help yourself figure out what you need to do. You may have to go over your plan several times to make everything work for you, however that’s ok, you should do this at least once per year and any time there is a major change in your finances.

When to Retire

Some times you just have had enough, sometimes it is health and other times people are forced into retirement.  Pick an age that you are comfortable with for your plan. If your actual retirement age changes, then re-evaluate the plan. You might choose 50 or you may work until you are 70 years of age or even longer. It does not matter as long as you can and you are enjoying the job. Start with the age that you think is most realistic for your situation.

What income will I Have After Retirement?

The next step is to figure out what your income will be when you retire. You will have a combination of company retirement plans, government pension plans and your savings. Look up these amounts or contact your HR people to find out what to expect. If you have savings, assume that you will receive 4% income from your savings. Don’t forget to project what your savings will be at retirement.  4% is a conservative number so anything higher than that is a bonus. Add up all of these income amounts and this will be your total income before taxes.

What do I make now?

Next calculate all of your income. Your last tax statement will be a good place to look. This will be your total income that you are currently making and is a good measure of what you need to make assuming you are living within your means. You will actually need a little bit less, since it is assumed that you are not saving for retirement now since you have actually retired.

Compare your Retirement Income with Your Current Salary

As a baby boomer this is were you may be in for a surprise. Most people will be shocked when they find out that they are receiving less than they thought for their retirement. Now is the time to take stock of your situation. Possibly you will want to adjust your retirement age so that you can build up a bit more savings and also earn income longer. If you have to retire then there are plans that need to be made to ensure that you can live comfortably.

How Long will I live?

This is another big question, since it really puts a limit on how much money I will need to have to live comfortably.  If baby boomers are an average 55 today, they can comfortably assume that they will live another 30 years. That is a long time to live on savings alone if there is no pension. For those folks with a pension they are better off, however inflation can catch up with them and make things difficult financially.

You can talk to an accountant to have someone do the calculation for you. However in simple terms if you have $300,000 saved up and you are going to live another 30 years, then that is only $10,000 a year plus interest that you can take out of your savings if you want your money to last well into your 80′s.  This can be very scary for a lot of baby boomers and it is time for a wake up call to take a look at what savings they need to have.

Hopefully if you are reading this post you will have gotten something out of it. If you do or would just like to leave a comment for our readers please feel free to do so. We would be glad to have them. Note that spam comments will be deleted.

How will you make your money last as long as you live? That is a question that many people ask themselves who are contemplating retirement.  Some people are very fortunate and will have pensions from their employer that kick in when they retire and will be payable as long as they are alive. Unfortunately consumers who fall into this category are in a small minority. Most of us must rely on our savings,  possibly an old age pension and  Canada pension in Canada . The United States has similar social plans. What many people do not realize is that these pensions are not sufficient to live on and you must have savings or company pension to provide you with the proper level of income that you feel you may need.

Calculate Your Expected Income

In order to answer the question of how will you make your money last you need to know how long you need it to last.  There are many assumptions you can make and you can find information from various sources that will help you gather this information to calculate your income and also how long your savings will last.

The premise is to balance income with expenses during retirement for longer than your statistical expected life time.  Here is some of the information you will need.

- Planned retirement age

- Expected age at death, plus 5 years as a buffer ( base this estimate on your parents age when they passed away)

- Total savings at the time of retirement

- Total of all pension income at time of retirement ( obtain estimates from your company and government )

- Income you feel that you need to maintain the life style you wish to lead in retirement

- Total of all debt payments at the time of retirement

- You need to make assumptions about the average inflation rates as well as your income from your savings, usually in terms of a percent interest rate of income.

Calculate How Long Your Money Will Last

There are several programs available that you can plug in these variables to help you calculate how long your money will last. Examples include Quickens Income Retirement Planner. This program and others like it will walk you through the exercise of entering the above information and even help you determine your expected life span.

The out put can be quite enlightening, providing you with information about how long your funds will last, based on your assumptions and then provides an opportunity to change various variables to perform sensitivity analysis.

If you first find that you are coming up short and will run out before your expected life span ends, adjust some of the assumptions to see what needs to change in terms of desired income, retirement age, amount of your savings, etc.  The next step is critical and can have a huge impact on your life.  As you adjust the variables, it is important to be realistic because if you are not, you may end up with a rude surprise later in life.

Sensitize Your Assumptions

By playing with the variables you may quickly see what you have to do to ensure that you have sufficient funds to last as long as you need. For example if you decided to retire at age 55 and find that you are coming up short in income in later years, adjust the retirement age and see what the impact is. Retirement age changes can be dramatic and can make a huge difference in your savings.  Another alternative is to retire at age 55 as planned, but then work part time to supplement your retirement income.

Inflation rates and interest income rates are another significant assumption that you will make. Small changes in inflation can really impact your outcome.

The point is if you play with the variables you will begin to understand what you need to do to endure that you can retire and life in the lifestyle that you would like. Unfortunately many people start this analysis a year or two before they retire and they then get a rude surprise. They experience a serious change in life style and cannot do some or many of the things they had planned during retirement.

Develop a Concrete Plan

Regardless of when you develop your plan, once you have gone through this process, develop a plan to meet your needs and achieve the goal your are aiming for. By calculating whether you have sufficient funds for retirement you can then take the steps needed to make sure you will be comfortable.

Develop your plan, follow the plan and re-evaluate your plan at least once per year.  Start early in your life and adjust the plan as life throws various curve balls at you. By following these simple steps you not only will know how you will make your money last, you will virtually guarantee your retirement objectives.

Comments are appreciated.

Half of Canadians expect pensions to be their largest source of retirement income, yet many Canadians have no idea how much they will receive from the various pension sources that are available, including any pension that they might receive from their employment. How can a person plan financially for their retirement if they do not have any idea of what their income will be when they retire? How do they know much they need to save to give them the life style they wish to have without having this basic information?

Many Canadians and Americans for that matter believe they will likely need to work well into their retirement years to give them the kind of lifestyle they wish to have.  Let’s look at the possible sources of income for a person aged 65 in Canada. Americans reading this post will be able to do their own assessment as well by looking at the pension sources they have in their country.

The common sources of income at age 65 are:

Company Pension plan – the amount you receive will depend on how many years you have paid into the plan and how much you have paid. Early withdrawal prior to 65 will decrease the amount that you will collect from the company plan and also the type of plan the company offers.

Canada Pension plan – the amount you receive will depend on how many years you have paid into the plan and how much you have paid. Early withdrawal prior to 65 will decrease the amount that you will collect from the CPP

Old Age pension – this is a fixed amount which all Canadians will collect. However if your income from other sources is higher than a prescribed amount the government will claw back some or all of the OAS pension.

RRSP investments- you can contribute to an RRSP until age 69 and then you must convert the RRSP to a RFIFF and start withdrawing money from the plan. You can also withdraw at age 65 as well, however there will be less to withdraw.

Other Investments – these are investments you may have outside of your RRSP. These could consist of investment properties, mutual funds, as well as the family home.

Supplemental pension amounts if your income is below a certain level

Part time or full time work after 65 – many Canadians will supplement their income by continuing to work beyond 65. There is the added benefit that this work keeps them involved and active in the community, and challenges their minds with interesting work.

Canadians expect part-time or occasional work (26 per cent) and income from their own investments (24 per cent) to be supplementary sources of income during retirement. Thirty per cent of Canadians aged 35-54 expect to be working in retirement, suggesting the concept of a traditional retirement is disappearing.

Regardless of your current age, it is important to develop a budget based on the expected income from various sources. This is really the first step to assess if you will have sufficient funds at retirement. It may take some digging to find the estimates for each pension source; however it will be worth it to assist in planning your retirement. Your HR person can assist you with the company pension plan estimates and the government web sites will help with the CPP and OAS pensions. Of course all numbers will be based on the assumption that you work until 65 to maximize your pension income. Usually if you retire early, the pensions will be decreased by some amount to reflect less time for your pension contributions.

Once you have these numbers a financial advisor can assist you with estimating the amount of money you will need to save to provide the lifestyle you are looking for. Your savings plan will be based on this amount needed to generate the amount of money you will need at retirement. You will need to make assumptions about inflation and the percentage of income you will generate based on your investment profile and risk tolerance. Invest conservatively and diversely to protect your retirement savings

Having enough money for a comfortable retirement (68 per cent) is the most important consideration in deciding when to retire. However, half of Canadians (53 per cent) who have established financial goals feel they are somewhat short or nowhere close to where they think they should be to ensure a comfortable retirement, up from 36 per cent in 2007.

The amount of money saved that a person will need at retirement is a very personal number. It depends on the amount of pension income as well as on personal goals, plans and expectations for retirement. On average, retirees have a goal of nearly $270,000 as the amount of money required for a comfortable retirement, down from nearly $450,000 in 2007. People not yet retired think they will need nearly two and half times that amount, or almost $660,000, down from almost $900,000 in 2007.

Clearly the recent economic turmoil during 2008 and 2009 has had an especially sobering effect on consumer’s savings objectives. The fluctuation of the investments during this time has scared many people and caused them to rethink their retirement plans. Fortunately if you are invested in conservative solid investments, they are generally returning to the pre-downturn numbers that we were used to.

The following poll by RBC seems to indicate that many Canadians and by extension, Americans, are retiring with some form of debt. This debt includes mortgages, loans, and credit cards. It is a big concern for retiree’s who are worried about whether they can pay thier bills while living on a fixed income.

There is really nothing wrong with retiring while still owing some debt, however you must take ownership of it and set up your budget to be able to deal with this debt. Review your income levels when you retire and take the steps you need to be able to pay your debt as well as the remainder of your expenses.

Take the time to read the results of the poll following. We will add a few comments at the end of the poll that we have re-listed here.

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Four-in-ten Canadians retiring with debt: RBC Poll

Inflation and taxes are top concerns for Canadians over the age of 50

TORONTO, April 26 /CNW/ – Four-in-ten Canadians (39 per cent) over the age of 50, who have assets of at least $100,000, retired with some form of debt and one-quarter (22 per cent) entered retirement with a mortgage on their primary residence, according to the first annual RBC Retirement Myths and Realities poll, which examines Canadians’ expectations and experiences in retirement.

The majority of retirees (70 per cent) feel it is still important to be able to save part of their income, yet more than one-quarter (28 per cent) have acquired new credit products since they retired.

“More and more, Canadians are carrying debt into retirement, which is not necessarily a bad thing,” said Lee Anne Davies, head, Retirement Strategies, RBC. “Having access to credit in retirement can be beneficial to managing income and cash flow and provide additional flexibility. To help make your retirement dreams a reality, our advice is to start early and prepare a comprehensive financial action plan that will keep you focused on paying down debt and saving, as well as establishing a budget for both your pre- and post-retirement years.”

Inflation and taxes are among the top concerns for retirees, with more than one-third (35 per cent) worried that inflation will negatively impact their retirement income, compared to 43 per cent of pre-retirees. Six-in-ten (62 per cent) retirees worry about taxes on their income, with two-thirds (66 per cent) believing the percentage of their income required for taxes will rise in the next 10 years. Retirees say they are currently living on 56 per cent of their pre-retirement income, indicating that spending drops significantly in retirement.

“It’s not uncommon to be concerned about maintaining a sustainable level of income in retirement, but costs you never counted on may also arise,” added Davies. “For example, our poll found that almost one-in-five retirees spend over $1,000 annually on prescription drugs. Working with a qualified advisor can help you prepare for taxes, inflation and unexpected costs that may impact your retirement goals.”

These are some of the findings the RBC Retirement Myths & Realities poll conducted by Ipsos Reid from March 10-19, 2010. For this survey, a national sample of 2,143 adults aged 50 and over with household assets of at least $100,000 from Ipsos’ Canadian online panel was interviewed online. A survey with an unweighted probability sample of this size and a 100 per cent response rate would have an estimated margin of error of +/-2.1 percentage points 19 times out of 20 of what the results would have been had the entire population of adults in Canada been polled. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.

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So what should you do if you carry debt into retirement? Pretty much continue as usual provided that you have the income to support the debt and can meet your monthly payments without difficulty.

If your debt payments are hampering your life style and preventing you from doing some of the things that you would like to do in retirement, you may want to think about making some changes. One way or another you should reduce your debt. You might have to use some of your savings, you might have to downsize your home, you might have to go back to work part time or full time. Some people will have to do all of these things to rid themselves of debt.

Make it a priority to avoid adding debt, sine on a fixed income it will be even more difficult to pay off additional debt as it builds up. If you have high interest debt such as credit cards, consolidate these into a loan or line of credit with a low interest rate. Destroy the credit cards or just keep them for emergency situations. Credit cards routinely charge in excess of 18% interest and at these rates, you will have a difficult time paying them off. Loans and lines of credit are currently around 5 or 6%. Loan interest and loan payments are much lower allowing you to reduce your principle much faster.

Add your comments to our post. We would be happy to consider them and add them to our blog. All reasonable and constructive comments accepted.

Most people do not think about this aspect of retirement, they just know that they want to retire and they cannot wait until they walk out the door. However it is always a good idea to plan your retirement in all aspects. Planning 10 years in advance seems like a long time ahead of time, however with a 10 year window you have time to fine tune and make adjustments to your financial plan to get ready for your retirement.

This assumes of course you do not wait until 10 years before retirement to suddenly start planning for retirement. All of us should save for retirement starting with our first job and then when we get close to retirement, we just need to find tune things to be ready for our leisure years.

Meet With Your Financial Planner

If you do not have a financial planner, it might be a good idea to find one and ask them for help in evaluating whether you are ready for retirement or not. Financial planners will provide this service  as a free service with the understanding that you will give them some business and either transfer your investments to them or begin investing with them. They get paid through commissions on any investments you may make through them.

We strongly believe on diversification, not only of your investments across mutual funds, stocks and bonds, but also across investment advisers. Never place all of your investments, especially your retirement funds, in one investment or with one investment adviser. There just has been too many stories of seniors being ripped off by people and/or the investments not doing well. You just have to recall Enron or the market crash of 2009 to know what the potential impact is.

Financial Planning Tools

Most good financial planners will have various tools available that can be used to develop a profile for you and a cash flow for you well into your retirement years based on your income, current savings, planned retirement date and expected life span. In addition you and the financial planner will make assumptions about the level of inflation and the amount of income you should expect for your investments. Most will error on the safe side of the assumption to provide you with a conservative estimate.

A combination of graphs and reports should be expected and you should be able to quickly see whether you have sufficient savings and retirement pension income to assess your financial health in retirement years.

It is never too soon to do one of these plans, however 10 years in advance of retirement is a good time to take stalk of your financial health.

Make Adjustments and Get Ready for Retirement

Doing a financial health assessment 10 years in advance of retirement provides you with sufficient time to make adjustments and get ready for retirement. As we said before this assumes you already have savings and are not starting at the beginning.

For example you might find that you need to work an extra year or so to achieve your financial objectives, or you may find that by increasing your savings rate, you can actually retire earlier than you thought from a financial perspective. Of course there are many other issues to take into account other than finances. Focus on these separately to make sure you are ready for retirement.

With this assessment you will have a clear picture of what you need to do to get ready. However you are not done yet. Be prepared to re-evaluate your financial plan every year and also after any major change in your life. You may find that no changes in your approach is necessary. On the other hand if inflation is high, interest rates change significantly etc, you may need to make adjustments to your plan. This is all good and part of every day normal planning for your financial adviser. In fact he or she should be encouraging you to review your plans every year.

Retirement Earlier Than Planned

Some of us are forced into retirement earlier than planned for a variety of reasons. For some it is health issues, for others it is the economy and our companies needs to down size. What ever the reason, you need to be prepared financially for this kind of thing. Although it is not fair or nice, it is reality and the only person who will look after you is yourself.

If you are faced with this situation, some belt tightening is probably in order. You should quickly re-assess your plan, then decide what you need to do re getting a job or developing additional income if it is needed.

A word of caution. In these situations some of us tend to take more risk and go after higher income investments to make up for losses in income. This is dangerous especially when you are so close to retirement. Something is better than nothing which is what could happen to your investment nest egg if you invest in the wrong thing. Discuss this strategy carefully with your adviser and ask for more than one opinion. You should have spread your investment across several adviser, so use then to gather various opinions.

Comments on this blog are welcome and encouraged