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Saving for Retirement Without a Pension
Written by Anne Papmehl

Monday, October 21st, 2019

Francis Loughheed, 63, will be retiring soon. For the last few decades, he's been self-employed, as well as working on government contracts. Like many boomers in the gig economy, he doesn't have a company pension or substantial retirement savings.

But unlike many of us, he's not too worried about it.

Retirement Without a Pension Doesn't Have to Be Scary

A few years ago, Loughheed started planning his retirement based on what he wants it to look like, rather than what he can afford.

Loughheed feels he can have a good retirement that includes travel, recreation and fulfilling experiences—without a company pension or sizable personal savings.

Fund Your Retirement Over Time

“Life, earnings potential and investments don't all end at age 65 and you don't have to fund your whole retirement when you retire," says Loughheed. “You still have 20 or 30 years ahead of you, so you can fund it over time."

From a planning perspective, Loughheed believes when you start by looking at your lifestyle requirements first—versus finances—you can generate a lot of creative ideas for leveraging your talents, knowledge and assets to develop a self-sufficient financial structure to support those requirements for your entire retirement period.

Three Stages of Retirement

Loughheed sees the retirement period as three predictable stages or scenarios—early active stage, downsizing (or hunkering down) stage and dependency, end-of-life stage.

“We don't know when they're going to happen, but we can start making conscious choices now about what kind of support structures we'll need as we go through those scenarios, and still be able to live the kind of life we want to live," says Loughheed.

In the younger retirement years, we might support ourselves through a combination of Canada Pension Plan, retirement savings and earned income.

“In today's economy, there are so many ways to earn income to meet your cash flow gap and continue saving for the future, as well as fund your travel and recreational experiences," he says.

It might also include moving to a smaller city where it's less expensive to live. “I can have a great life here in Cornwall for a lot less than what it would cost me in a big city like Toronto," says Loughheed.

Lots of Opportunities for Travel and Adventure

If you want travel, recreation and adventure when you retire, there are now more options than ever—depending on which stage of retirement you're in. “You might do something like sell your house and move to a condo and spend three or four months in Portugal or Mexico, where it's cheaper to live, and rent your condo out while you're away," says Loughheed.

In the downsizing stage, we're simplifying and de-cluttering our lives, including our finances.

“You might sell your house and move into a condo or rent an apartment and convert the equity you now have into something that pays you a monthly income, like an annuity. Or you might put it in a longer-term investment to ensure you have funds to cover the costs of nursing and long-term care you may need later on," says Loughheed.

Advice for the Younger Generation

What advice does Loughheed have for younger members of the gig economy who still have time to plan?

  1. Learn how to make money without a full-time job

“The days of a full-time job for life are over, so you need to know how to be a freelancer, get contracts, create proposals, and sell yourself," says Loughheed. He suggests having at least three—and ideally five—ways of earning income from different sources.

“Income from an investment property can be one, as can an online side hustle, so the idea is to have a portfolio of sources so that you can make money without a full-time job."

  1. Diligently save a percentage of everything you earn (10% is a great amount to save if you can).

“If I had done that, I wouldn't be working right now," he says.

  1. Approach your entire earning capacity as a business.

“When you take an entrepreneurial approach, you start to see opportunities that can lead you to economic self-sufficiency without a job—whether you're a millennial or a retiree."

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