Article by Scott Lewis for the Times & Transcript - April 25, 2019

Retirement is supposed to be the reward for all those years of working, planning and saving. However, retirement will look different for each of us: some will enjoy the golden years and others will spend much of it worrying if they will outlive their savings. The good news is that there are steps you can take to turn the dream of your ideal retirement into reality.


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This first step is to have a plan. A financial plan will help you decide if you are financially able to retire as well as give you an idea with respect to what you can safely spend during those years. It is important to use realistic return assumptions for your investments. Be conservative in your assumptions; outperforming your plan means you will have more money to spend than you anticipated. Underperforming means you risk running out of money.

Once in retirement you need to ensure your portfolio is properly constructed for your financial situation and tolerance for risk. In retirement you may not have the luxury of stopping withdrawals and waiting out market downturns. It’s important to have a cash flow plan that can survive the ups and downs of the markets including maintaining enough money in cash or low risk investments for any short-term needs. Proper diversification is a must.

It is important to understand your different income sources and the impact of when you decide to take income from each. For example, you can choose to start receiving Canada Pension Plan (CPP) benefits at age 60, though benefits will be reduced as a result. For some, that will be the right choice. For others it may make sense to wait until age 65 or even delay to age 70 for a higher pension. Managing your income to minimize tax is critical; every dollar of tax you save is another dollar in your pocket to spend as you wish. Managing taxable income can also help you avoid (or minimize) clawback of income from government programs such as Old Age Security (OAS) and the Guaranteed Income Supplement (GIS).

Multiple income streams in retirement can mitigate some of the anxiety related to market fluctuations. For couples, one spouse having a pension plan could certainly help with this but not all of us have that luxury. While CPP and OAS are separate income streams, for some retirees, especially those without a pension, creating our own “Pension” or stream of income that is not correlated to the markets may make sense. This could be done by allocating some of your funds to an annuity. Should the markets not cooperate, a portion of your income will remain unaffected. An annuity transfers risk from you to an insurance company by trading a lump sum of money for a guaranteed income stream. Annuities can lack flexibility so work with a professional to decide if it makes sense in your case.

It is important to stick to your plan and update it on a regular basis. Your financial plan should be a living document, not paper gathering dust on a shelf. Life changes and you may need to adjust the sails on the way.

It is also important to plan for the non-financial aspect of retirement living by considering what will make you happy. For some, that will be travel or golf and for others it may be spending time with grandkids. The point is, put thought into what you will do with the extra time you will have. Staying busy, learning new skills and meeting new friends will help keep your mind and body sharp. Your social network will most likely change as you enter retirement and leave your coworkers behind. Make an effort to find friends that share your interests and have the time to enjoy life as you plan to. Having friends to share your experiences with will make the ride that much richer.

Finally, think about your health. It is certainly easier to enjoy life if you are healthy and that does not happen by accident. Exercise and healthy eating will pay dividends long into your golden years.