Five Steps to Prepare for Retirement

Written by Brenda Spiering

Monday, May 7th, 2018

Whether your idea of a perfect retirement is travelling the world, spending time with grandkids or turning your favourite hobby into a new career, there are key things you can do in the years leading up to retirement that can help you achieve your goals.

According to an Angus Reid poll of Canadians in retirement, "Less than half (46%) of retirees say they retired when and as planned." But there are ways to improve your chances.

If you're hoping to retire in the next 10 years, here are five steps you can take now to help ensure you're ready.

  1. Crunch the Numbers

Use a retirement calculator to help you figure out how much you'll need in retirement and whether your expected savings and pensions are on track to meet that goal. Numbers don't match up? You'll need to either adjust your planned retirement date, increase your monthly savings or reduce the amount of income you plan to have in retirement.

  1. Review Your Investment Portfolio

It's a good idea to review your investments to ensure they still align with your objectives. As your time horizon to retirement narrows, you may need to adjust your asset mix to limit your risk exposure appropriately. For instance, stocks can be a valuable source of investment growth, but they also carry risk. To help protect yourself from stock market ups and downs, it's a good idea to gradually shift to a more conservative asset mix, rather than one that's too heavily invested in stocks.

  1. Pay Off Your Mortgage (and other debt)

You'll want to avoid entering retirement with debt. Still got a large mortgage? Consider downsizing to reduce your monthly payments. Carrying credit card debt? It's a smart idea to start increasing your payments so you can pay off your debt as soon as possible. If you own a home, you may want to consider consolidating your debt with a lower rate home equity line of credit in order to reduce your overall interest charges and pay off your debt faster.

  1. Talk to Your Children

Still supporting your kids financially? Are they still in school? You may want to adjust your retirement date to an agreed-upon time when you expect them to be financially stable. Sharing your plans with your kids will also ensure they know what your expectations are so they can work towards achieving their independence.

  1. Test Drive Your Plans

Plan to retire to a cottage? Spend winters in Florida? Do a reality check to determine if it's right for you. While the idea of spending retirement in a place where you love to vacation may be enticing, the reality may be very different. How much time do you really want to spend on the golf course? How often will you be able to see your grandkids? Spend some time where you're dreaming of going, doing the things you plan on doing, to help determine if it's really how you see yourself living in retirement.

Taking these five steps can make a huge difference in how prepared you are to jump into your next life stage. The good news? Angus Reid says, “overall, retired Canadians are enjoying this phase of life." Planning ahead will help ensure you're one of them.

 

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