Retire Like a Pro Q&A: Things To Watch Out For As You Retire!

Your Ultimate Guide For The Next Phase Of Your Life!

So, How Do You Know When You Are Ready?

Getting ready for retirement is not something you can physically touch, so we use things like dates, ages, rules, and money to make it feel more real. For instance, when talking about pensions, some folks feel ready to retire because they have a full pension or hit a certain score, like their rule of 80 or 85. Sometimes, we follow rules about things like the Canada Pension Plan and Old Age Security, like changing the age from 65 to 67. On the money side, we figure out how much money we need to make retirement happen. We put the pieces together to help ensure everything is in place for a comfortable and secure retirement.

However, after having done retirement projections for more than 25 years, I’ve come to believe that genuine readiness isn’t always something you can touch or measure. I’ve encountered individuals with solid pensions and substantial savings who still aren’t truly prepared for retirement. It’s not always about the financial aspect; some love their jobs, while others dislike them but lack a fulfilling life to retire to. Some folks find themselves on the fence — ready to retire but concerned about potential boredom or missing the camaraderie of work friends. Sometimes work — isn’t work, it's fun.

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Is There Anything I Can Do To Make My Retirement Transition Easier?

Readiness for retirement isn’t just about money; sometimes, it’s about instincts, feelings, and lifestyle. While money is undoubtedly crucial for retirement readiness, it’s essential to recognize the distinction between retiring FROM something and retiring TO something. The individuals most prepared for retirement often have thoughtfully planned a fulfilling life to retire to, understanding that the quality of retirement goes beyond financial aspects.

I covered parts of this in my article about 5 mistakes in retirement, you can read it here:

Can Financial Projections Account For Unexpected Occurances?

The short answer is yes…they should be able to. I like to recall sayings to help me remember to be conservative in our projections.

Everyone Has A Plan: Until They Get Punched In The Face — Mike Tyson.

Economic conditions can also prompt individuals to consider early retirement, and these could have implications for retiring earlier than anticipated. Each retirement strategy comprises aspects that are within your control and those that aren’t. Even if you’ve meticulously crafted a retirement plan, an unexpected curveball might come your way, throwing a wrench into your carefully laid-out plans.

As an example, let’s talk about the impact on the stock market. How many people do you know who were planning to retire, only to experience a 15% to 20% drop in the stock market? And how many of them opted to postpone their retirement plans as a direct consequence? The unpredictability in both the job market and financial landscape has undoubtedly influenced retirement decisions for many.

Also, people are enjoying longer lifespans, and it is becoming increasingly important to help ensure their financial stability. When doing your financial projections, it really boils down to scrutinizing the assumptions within those projections. Consider the retirement planning calculators: you enter various numbers, and voilà, you receive the results, like “You need 2.8 million dollars to retire.” But it is often not as simple as that. It’s crucial to grasp that the accuracy of the output hinges on the quality of the input. A significant portion of this input involves a set of assumptions, essentially educated guesses. If the results don’t align with your preferences, it’s necessary to reassess and potentially adjust the input.

I consistently recommend to people that when delving into their retirement projections, focus more on understanding the limitations of the assumptions than the results. It’s the assumptions that shape the outcomes. When considering these pay close attention to factors such as life expectancy, rates of return, inflation, and withdrawal rates. These elements play a fundamental role in determining the overall success and reliability of your retirement projections.

Could there be a middle path involving part-time work, scaling back, or even returning to work after a few years — something people might now consider?

This stands out as one of the major trends in retirement. The concept of retirement has evolved beyond simply not working. An increasing number of individuals are now interested in working during retirement, actively planning for it, or finding themselves drawn back into work during their retirement years. Opportunities for working in retirement are more abundant than ever. In fact, the not-so-new term now circulating is the idea of planning a phased retirement or a transitional retirement. Personally, I find this concept to be excellent, and many people seem to be achieving success with this approach in their retirement journey.

How Do My RRSP Investments Come Into Play?

At a certain juncture, you inevitably need to tap into your RRSP. According to the rules, you must commence withdrawing income from your RRSPs by December 31 in the year you turn 71. Drawing it sooner is acceptable, but not later. My general recommendation is for my clients to enjoy their retirement. For many, postponing the use of RRSPs for income until the age of 71 undermines the primary purpose of the RRSP, which is to enhance the quality of retirement years. The decision on when to implement a withdrawal strategy can be influenced by lifestyle considerations as well as tax planning strategies.

What guidance would you offer to baby boomers contemplating retirement?

Develop a comprehensive financial projection that addresses both lifestyle and financial aspects. Frequently, these plans primarily concentrate on financial considerations, but it’s crucial to recognize that retirement encompasses more than just money. Even if you have substantial financial resources, their value diminishes if you lack a plan for spending, a supportive social circle, or good health. It’s essential to remember that the purpose of money is to facilitate a fulfilling life, and retirement is ultimately about enjoying the golden years to the fullest.

In The End…

Navigating the path to a fulfilling retirement demands a holistic approach that extends beyond financial considerations. As baby boomers approach this significant life transition, it is paramount to recognize that a well-crafted plan should encompass both the financial and lifestyle dimensions. The value of money lies not just in its abundance but in how it enhances the quality of life during retirement. By embracing a comprehensive strategy, individuals can not only secure their financial well-being but also cultivate a vibrant and fulfilling retirement experience. As we embark on this journey, let us prioritize health, relationships, and the pursuit of meaningful activities, recognizing that true wealth lies in the richness of our golden years.

Did you know that navigating the uncertainties of the markets and your finances is generally smoother with the support of an investment advisor or portfolio manager? Studies consistently reveal that individuals who work with investment advisors and portfolio managers tend to have up to three times higher net worth on average, but that’s not all, there’s a significant impact on overall well-being, with those who seek professional advice exhibiting higher levels of happiness and lower anxiety. Having a guiding hand through the financial landscape proves beneficial not only in terms of monetary outcomes but also in fostering a sense of security and contentment, making the challenges of an uncertain year more manageable with professional assistance.

Have Questions? Contact us!

We’ve assisted our clients through every stage of life. Even when you’re not aware that something might impact your financial future, it likely will to some extent. Engaging in a conversation with your investment advisor about any financial changes is an excellent approach to keeping your financial goals in focus.

We have expertise in cross-border wealth management. Don’t hesitate to reach out to us — we’re committed to providing tailored solutions for your cross-border financial needs.

For more information or to connect with me, you can reach out via email at [email protected] or get to know me better by exploring my engaging video content on YouTube https://www.youtube.com/@joemacek.

I share valuable insights and discussions on financial planning, market commentary, and investing concepts that can further enrich your understanding. Join me on my channel to discover more!

Don’t hesitate to reach out today at 1–888–324–4259 to discover more about how we can help you achieve your investment milestones.

Joe A. Macek, FMA, CIM, DMS, FCSI

Investment Advisor, Portfolio Manager

iA Private Wealth | iA Private Wealth USA

Toll Free North America: 1–888–324–4259

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