You might be a social butterfly, a homebody, a hobbyist, or perhaps a volunteer, worker or an avid shopper.
Just as there are all kinds of people in the world, there are many different types of lifestyles they can pursue in retirement.
Knowing what kind of lifestyle you’d like in retirement and how much income it takes to sustain it can help you make some important decisions before you get to that stage of your life.
The Investor Education Fund (IEF), a non-profit organization dedicated to giving Canadians unbiased financial information, has developed an online tool that can help Canadians identify what kind of retiree they are or will be and which of the eight identified types of retirement lifestyles they might enjoy and financially maintain.
For example, social butterflies love to be with other people and are always on the go.
They spend as much time as they can with friends and family, often go out to movies and social clubs, may work part time or on a volunteer basis, and have lots of social obligations. This retirement lifestyle group typically has an average income of $37,600 in an urban location and $33,000 in a rural one.
Busy homebodies, on the other hand, typically have an average urban household income of $40,000 and rural income of $31,800. Homebodies find home and family the greatest source of enjoyment in life and are more likely than other retirement groups to live in a detached home because their home is so important to them. About two-thirds of homebodies are women.
Hobbyists, with an average income of $38,800 (urban) and $28,200 (rural) are happy, healthy and relaxed, have a few driving passions they pursue — like sports, culture or arts and craft — and like to spend time with people who share their interests.
“(While) financial planners and others suggest a wide-ranging 40 to 80 per cent of pre-retirement income will be needed for retirement years, depending on lifestyle and health, it can be difficult to predict preferences and activities five, 10, 20 or even 30 years down the road,” said Tom Hamza, IEF president. “To help Canadians plan for their financial future, IEF has developed an online profile questionnaire that can help those thinking about retirement consider not only the type of lifestyles they might want or anticipate, but also how much income they’ll need to maintain them.”
Understanding different retirement lifestyles and what it takes financially to maintain them is probably a good thing since, according to a recent poll by RBC, the majority of Canadians over the age of 50 who have not yet retired expect to have a successful retirement.
The caveat, however, is that more than one third are worried they won’t have enough money to live well and do what they want because of inflation, and they likely will live a longer-than-expected life into their mid to late 80s.
“Everyone hopes to have enough flexibility and funds to live the way they want to in retirement and not have to depend on anyone else for financial or other assistance,” said Lee Anne Davies, head of retirement strategies with RBC. “The reality is that there are a number of factors in retirement that we can’t control, such as inflation and, to some extent, longevity.”
In the poll, 90 per cent of pre-retirees said they expect to rely on their RRSPs and RRIFs to financially support their retirement, followed by government and employer pension plans, old age security and equity in their homes.
Pre-retirees are concerned about keeping pace with inflation, but the poll reveals that only 35 per cent have invested with inflation in mind. Of that percentage, men are more likely than women to invest with inflation in mind.
Seventy per cent of pre-retirees said they would be willing adjust their lifestyle as necessary to cope with inflation.
“Success in retirement will look different for each individual, not matter what their age,” said Davies. “When circumstances change, you need to manage your finances well leading up to and throughout your retirement.
“Working through the possibilities with a financial planner to better understand what impact inflation and disabling health issues could have can help ensure your life in retirement is what you want it to be.”
Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.