According to a recent poll by the Angus Reid Institute, 54% of Canadians planning to retire soon expect to delay their retirement because of economic and inflation concerns.
I understand the anxiety retiring can create. Decumulating (drawdown of savings to provide an income stream) assets in retirement to ensure money lasts is one of the more complex puzzles to solve, and the recent inflation story isn’t helping. For other soon to be retirees, other issues can include making a retirement paycheque, ensuring annual tax efficiency and managing year-to-year surprises, because there are always surprises.
Inflation worries, economic uncertainty, and market volatility are not and should not be our primary concerns. They are relatively short-term in nature and out of our control.
The most fruitful retirement conversations are not about trying to guess the direction of markets. Instead, they are about creating the daily lifestyle the retiree wants to live. In retirement, the most significant risk is health, and the biggest asset is time; it's up to you to ensure you use your time effectively for what you want. If boredom sets in, physical and mental health risks can follow.
To help mitigate both the health and financial risks in retirement, I have a hybrid strategy to suggest. I want to turn this classic story of retirement upside down. Even if you are one of those that aren't worried about money, don't delay your retirement. Instead, I recommend re-imagining retirement to include purposeful daily work, at least on a part-time or volunteer basis.
If you're lucky enough to have a career you are fulfilled by, there are usually opportunities to slow down by contracting or moving to a part-time or mentorship role. For example, most of the retired financial planners I've interviewed through my podcast at the Institute of Advanced Financial Planners have said they haven't actually retired. Instead, they reduce their workload to focus on a select few clients or mentor new planners.
Suppose you can't wait to retire. In that case, I recommend taking some time to imagine what hobby or passion you have enjoyed throughout your life that you can now make a priority and potentially monetize. The goal is to find a specific purpose you'll love to strive for daily that can supplement your income for at least a few years. Don’t let short-term economic conditions be the reason you delay your dream.
The beauty of thinking this way is that stepping into a new career or business venture would be challenging. And challenging yourself to learn continually will help keep you feeling young, build new connections and save you from being bored in retirement. Researchers have studied this; keeping yourself active, mentally challenged and involved in your community improves your odds of living a longer and more fulfilling life.
If you're not interested in starting your own business or if your hobby can't be monetized, then the labour market today is one of the strongest in Alberta since 2007. There is plenty of work for those qualified and willing. Indeed, those willing to be creative can find ways to utilize the skills they've learned over their careers for something they might enjoy.
“The key to a happy retirement may be . . . not retiring. Work because you want to, not because you have to, to achieve balance, health, and purpose in your life after full-time employment," say Mike Drak, Rob Morrison, and Jonathan Chevreau in "Victory Lap Retirement".
An extra tip: Focus on your daily habits to survive the bear market. How can you utilize your time more effectively? And where can you save or make more money? If you can figure out a way to double your savings, you'll be better off than attempting to double your rates of return through speculative investing. Investment management isn’t easy. It's ok to ask for help.
David Miller, BFS, CFP, R.F.P, CIM is with RT Mosaic Wealth Management in Calgary, and is a fee-only financial planner and a registered portfolio manager. View Miller's registration status under the Alberta Securities Commission and financial planning status under FP Canada, as well as under the Institute of Advanced Financial Planners (IAFP). Email [email protected]