Once you do your “hard stop” to working and truly enter retirement, there is a big difference between time-filling and fulfilling time. There are 3 main factors we will all need to consider as we enter retirement.

1. If you worked a 40-hour week, 50 weeks a year, you roughly spent 2,000 hours a year working.  That’s a lot of free time in retirement.  For the most part, retirees have very little difficulty filling their time day-to-day.  They revel in not working “for the man,” but after a while, some feel they don’t do the kinds of things that they would find meaningful or inspiring any more.  Perhaps their career made up a large part of their identity when they were working and for these Americans it is so important that they find pursuits that they can enjoy.  Activities that are meaningful or inspiring tend to flow from our key values and help to enrich our lives.

A leisure pursuit is best if it fulfills and defines you.  This should be something that you think about, something you do often, and is absolutely one of the key traits that will ensure your happiness.  You see, those retirees that have many core pursuits are statistically happier than those that retire with only one or two things they like to do outside work.

1. The second main focus of a retiree’s life is their home.  Home is a place to store memories, entertain and somewhere that is familiar and safe.  Over the course of an average retirement, there is usually one or two moves to a home better suited for different stages of life.  I know many of you reading this, feel you are in the home that you will be in for the rest of your life; however, that sentiment does indeed change over time, when you have trouble getting up the stairs or get tired of cutting the grass or shovelling snow.  If you live into your 80’s or 90’s, you may want to use your primary residence to provide the proceeds to fund an assisted living residence arrangement.
2. The third major retirement element is the protection of your long-term lifestyle.  As we age, we all tend to have less risk tolerance to change, and our desire to keep the status quo grows even stronger over the years.  You certainly want to be able to sleep at night without the worry of outliving your money.  For this reason, it is imperative that you have an advisor to assist you in converting your assets into a sustainable income.  You want to create a monthly income that you can count on.  Your withdrawal rate must be future-focused, and it is always advisable to setup an annual income as a percentage of your total retirement savings rather than withdrawing random amounts as needed.

Let’s look at an example.  If you have a saving portfolio of $500,000 and you wanted to withdraw an income from this investment for the next 30 years, how much could you expect?   Assuming a sustainable withdrawal rate of 3.8% over a 30-year time horizon, you could expect to draw down approximately $19,000 per year, indexed at 2.5% per year for inflation (this is assuming a TSX index + 2% with an asset mix of 50/50: equity/fixed income and a 6-month term deposit + 1%).

Christine’s Tip:

Retiring successfully today is now more about continually planning, identifying possible gaps, and making efficient use of the financial resources that you currently have to help ease the life transitions that you will go through at every stage of retirement.  Remember to keep things simple and seek professional advice if needed.  Your main focus should be enjoying your time now.  You made it.  You finally have a 30-year long weekend, free from the demands of a job and you can now pursue your own interests without anyone’s permission.  Enjoy!!