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It-s-Your-Life

Creating your retirement vision

A vision means different things to different people. To the head of a large corporation, it’s the ability to chart a course that will deliver success (think Steve Jobs and Apple), to a shaman, it’s a dream to be interpreted and the path followed based on that interpretation. In the retirement planning world it’s a personal statement outlining how you want the rest of your life play out.

When you create a vision statement, it’s a marriage of compromise between sometimes competing ends: the things you want for your life and the resources you have available to deliver them with. People sometimes feel that this type of planning tool is only for the wealthy. The truth is it’s an exercise that we should all engage in as we move closer to retirement or even if we are already there. It’s an opportunity to evaluate our lives and look ahead to creating the best future we possibly can.

There are five areas of life that we focus on when helping people to create their visions: financial realities, health, accommodation decisions, lifestyle and social networks.

 

Financial Realities

We all have different financial situations: some of us are wealthy and some of us are not, there are those who have pensions that will help finance their retirement years and then there those whose only pension will be the combination of government benefits and the income they can draw from their savings and investments. Whatever the combination of income sources you have, you need to understand what they are and what you can realistically expect to have in the future. What assets do you own, what are they worth and are you prepared to part with some of them in order to maintain your lifestyle? How important is your current lifestyle? Was it something that made sense when you were working but in retirement seems excessive? Are you planning to do more with all the extra time on your hands? Are you leaving the workforce, planning to switch careers or slowdown in your current role? The answers to these questions will lay the groundwork for the ones to follow.

 

Health

If one is fortunate enough to be of sound mind and body, the potential limitations might not be a factor for many years. For others, health challenges might dictate travel plans or lifestyle choices be altered or left behind entirely. The cost of certain types of healthcare can drain resources that were expected to provide for a certain lifestyle. If the health issue is critical enough, it may involve care outside of our provincial systems and require large amounts of capital to fund. How long will we be able to care for ourselves; what types of facilities would we be comfortable with; what can we afford? Answers to these questions will have timing, mobility and financial ramifications.

Accommodations

So where will you live once you retire: the family home, a condo, a gated community or a senior’s residence? Will a downsizing free up capital to create a better lifestyle? Will you travel more and therefore have less time to spend keeping a home and yard? Do health challenges dictate your proximity to health care services - either as an outpatient or as somebody who needs a greater level of care permanently? Do you want to stay living where you are or have you always wanted to live in a different country? Would a place where the cost of living was low make your capital go further, and enable you to enjoy a lifestyle that would otherwise be impossible? Would you like to be closer to family or is that not an issue? While these are bigger decisions, they tend to be determined by the other realities in your life.

 

Lifestyle

Retirement can be an opportunity to do things you’ve always wanted to do; with the time constraints of full time jobs and raising children behind you, your options have increased dramatically. Are there interests that you’ve been waiting to have enough time to be explored? Are there activities you’ve not been able to do as much as you would have liked, but can now focus more energy on? Do you leave the active workforce and live a life of leisure, or is this an opportunity to start a new career? Maybe start a small business or work less but still generate a paycheque for the things that you couldn’t finance from your retirement savings? Are you on the same page as your spouse or partner (if you have one), or do you need to find common ground that you will both feel good about? While important to your happiness level, sometimes these decisions are driven by economic and health considerations.

 

Social Networks

One of the realities of retirement is that our social networks will change. For many, the people in their lives most are determined by their working life. When we retire, many of those relationships will be challenged, or fade away entirely. As we get older, people will pass on or move for their own retirement reasons; either way, the network of friends and family will slowly shrink unless we make a concerted effort to reach out to new people and create new friendships. If we elect to move somewhere else, it may mean starting over entirely; if we move to a gated community or residence there may be an opportunity to make new friends built in. While not as tangible as the other four areas we’ve discussed, strong social networks are known to be a contributing factor to longevity and mental health.

The steps in creating a vision are as follows:

  1. Think deeply about these five areas, what they mean to you, and what you really want.
  2. Write down as many of them as you can (don’t worry; we’ll eliminate the silly ones next step).
  3. Narrow your list down by eliminating all that are impossible due to financial, health and time constraints.
  4. Narrow it again by choosing only the ones that resonate with you deeply.
  5. Take the remaining statements; use them to write a paragraph describing your life.

This is your vision. It’s not a plan; it’s the foundation you use to build the plan. It’s the framework that will help you answer the when, what and how questions that arise. Like a great corporate vision statement, your vision statement will bring clarity to you as you go through the retirement planning process.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.



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About the Author

Jeff Stathopulos, CIM, CFP, Portfolio Manager

Jeff is an advisor and partner with The Navigation Team at Scotia Wealth Management.

He lives in Kelowna with his wife Tanya, their two university bound daughters and their canine kids.

You can contact Jeff by email at [email protected]

Website:  www.yourlifeyourplan.ca

The Navigation Team

Scotia Wealth Management

This column is for information purposes only. It is recommended that individuals consult with their financial advisor before acting on any information contained in this article. The opinions stated are those of the author and not necessarily those of Scotia Capital Inc. or The Bank of Nova Scotia. ScotiaMcLeod is a division of Scotia Capital Inc., Member Canadian Investor Protection Fund.



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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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