Derek, I am planning to retire in a few years, what should I consider now?
After years of working and saving diligently, you have finally found yourself in the position where you can see your goal of retirement approaching. It is a big decision that shouldn’t be taken lightly. Before you take that final walk out the corporate door, be sure to consider these steps.
Above all, I suggest that you take the time to create a financial plan with a qualified wealth advisor. This financial plan should consider all factors including the various sources of your future retirement income, your current assets, taxation, and address your eventual estate plans. A proper plan will be conservative in the estimates and demonstrate longevity to ensure you don’t outlive your assets. The financial plan will be critical before retirement, but also during retirement, to guide you on your spending and advise you on the sustainability of your portfolio.
The financial plan will be built around your future retirement expenses. If you are unclear about what your expenses will be, it is important to begin tracking them now. I don’t like to think that there is a magic formula that can be applied to everyone. I think it is far more valuable to track your monthly spending, understanding what expenses will continue throughout retirement and which expenses will be eliminated. The example is that perhaps there are less costs relating to your vehicle since you’re not commuting, but you’re travelling more so your vacation expenses are higher. This doesn’t mean to track every penny, just be aware how much money you’re spending and get a sense of where it is going. After all, there is no new money coming in once you retire.
It’s a good time to take a hard look at your investment strategy. If you don’t have a strategy, it’s best to have a talk with a qualified wealth advisor to understand if you’re investing as efficiently as possible. If you only have a few working years left, the final years of returns may be critical to your future retirement. Part of this process should include reviewing your pension options. If you’re lucky enough to have a company funded pension, talk with your wealth advisor to understand your options now so you’re prepared for retirement.
Another good idea is to consider consolidating your investments wherever possible. As you enter retirement you should be spending less time worrying about your assets and more time enjoying life. By moving all of your investments to one trusted wealth advisor you can be sure that you’re receiving consistent advice and that your portfolios are working together efficiently. Beyond this, once you start to receive an income from your investments it is ideal to have them all in the same place. This way, you’re receiving one single deposit from the same source, rather than multiple deposits from multiple accounts.
If you don’t have a trusted wealth advisor, it’s time to find one. A good wealth advisor will be able to help you create a financial plan and prepare better for your retired years. A good wealth advisor should have the ability to offer diversified investment solutions tailored to your needs. A good wealth advisor will help you navigate markets when times are good, but they will also provide guidance when markets are tough. A good wealth advisor should offer multiple services such as business succession planning, trust and estate services, and insurance advice, among others. Finding a good advisor may take time, and furthermore, it may take a while to fully trust in their abilities and product offering. The sooner you start this process, the better.
Lastly and certainly not least, take some time to consider what you’ll do to keep yourself busy in your retired years. You’ve spent many years working and the sudden stop at the end can be taxing emotionally, particularly once the excitement of no longer working passes. Finding ways to stay busy will be important to maintaining good health and help make sure your retired years are some of the best.
Happy investing,
Derek Fuchs
Senior Wealth Advisor
Scotia Wealth Management