I have a problem with the word “retirement”. If you look the word up in the dictionary it means to “go away”, the definition even goes so far as to state to become “reclusive”. I find the term outdated and have said before it is time to retire the word retirement.
People have told me they start to think, or perhaps worry about retirement about a decade before it happens. They wonder if they have enough money to see them through their retirement? They worry about how they will define themselves after their career, and a real fear for many is how they will manage all that free time?
With these lingering doubts and uncertainties, how could you ever get excited about the next third of your life?
As someone who has ‘retired’ twice, I think it all begins with changing how we think about retirement. The new term now being popularized, and one that I am onboard with is “rewirement”.
5R’s of retirement
Let’s rewire our thoughts on retirement in what I refer to as the 5R’s of retirement:
1) Reassess:
Take the time to really understand both how you feel about your retirement and the finances surrounding your retirement. Are you worried about being able to fund your retirement? The fear of outliving your money? Do you know how your days will be filled when you do not have to set your alarm clock? Does that unknown excite you, or fill you with anxiety?
It is my belief that when you reassess and gain a solid understanding of your finances and your emotions around retirement, many of the worries and fears can then be addressed with action. One word of caution when you reassess – don’t compare your plan, your finances, or your lifestyle decisions to anyone else. Retirement planning isn’t a cookie cutter approach. It is your evaluation of your life and your plan which isn’t carved in stone.
Begin by listing where your money is going to come from in retirement. Government programs such as CPP, OAS and GIS if applicable and for those who have company pension plans often find these pillars their financial foundation. Next savings via TFSA’s, RRSP’s, non-registered accounts, income producing properties and equity built up in your home. Being razor sharp on how much money you have coming in and what you need and want to spend your money on can help to reduce the concern about outliving your money.
2) Reunite:
Perhaps one of the greatest gifts of retirement is time. Time to reunite with family, friends, passions, hobbies and establish new goals. When you are in the thick of building a career, time can seem like a distant luxury where we often put things that are not an immediate priority to the backburner for when we have more time. Well, that time is now. Will you work part-time in an industry you have always wanted to try? Or will you pick-up an old hobby? Perhaps volunteer for an organization you are passionate about? Make time to connect with old friends? Babysit the grandchildren more often? Take this time to reunite with yourself and the things that truly matter to you.
3) Reward:
You have worked hard to earn the right to retire. You have relied on your human capital throughout your career to earn a living and save for a retirement, and now you get to rely on your hard-earned financial capital – the money you have saved. Go ahead and spend it. Enjoy it. If you don’t, I guarantee your heirs will!
4) Restructure:
When retirement arrives, I rarely hear people say that they miss their income. However, what they do miss is the structure their day once had and the built in socialization that their job provided. I believe in being very intentional with how you restructure your life post retirement. Take the time to restructure a day, a week, a month and a life that brings you joy and purpose.
5) Reposition:
In our younger years we had the luxury of time, if financially there were missteps along the way, we could recover. However, the reality is it can be very difficult to make up for lost ground when you hit retirement. That is why it is essential that you review, assess and understand how much risk your financial portfolio holds and if it is time to reposition that risk. If the markets pull back significantly ask yourself not only how much am I willing to lose, but how much can I afford to lose?
Or, you may have all your equity tied up in your home, which is not uncommon but it is very difficult to eat a brick in retirement. You may need to explore options to release some of the capital to fund your lifestyle. Reposition your finances to set you up for success in retirement.
The time to take charge of your retirement is now.
At the end of the day – you don’t want to die the richest person in the graveyard. You want to have lived a life by your terms. The only terms that really matter.
This is the first of many blogs focused on the what I like to call the next third of our life.
I’m excited to share my thoughts on the economy, retirement, investment landscape and so much more. As well, we want to hear from you. What is on your mind, your concerns, and topics you would like to see cover?
Let’s get the dialogue started…
Pattie – PLR@heb.ca
