“Retirement isn’t just about the money,” says TD Waterhouse senior vice-president Patricia Lovett-Reid. “I think as people progress through life, their definition of wealth and their definition of retirement continue to evolve.” According to the TD Waterhouse Canadians and Retirement Report, the success of transforming your retirement dreams into reality relies on two key points: your savings and your health. The report polled retirees across Canada to discuss their retirement triumphs and concerns. While 59 per cent claim to be largely living the retirement they imagined, the majority of respondents still fear outliving their savings. Looking back, certain mistakes could have been avoided. The retirees have some financial advice for those next in line to leave the workforce: start earlier and save more. Moreover, 72 per cent of the respondents have agreed the most valuable advice one can receive is to take care of your health.
Other advice the retirees wish they heard before retiring includes: take the time to understand and prepare for retirement (67 per cent), pay off all debts before you stop working (63 per cent), and save more money than you think you will need (58 per cent). They also suggest working with a professional (25 per cent), and not leaving the work force too early (20 per cent).
So why do many Canadian boomers fear they have not saved enough for retirement? “I think we have come into a real lifestyle where we want it, we go after it and we get it,” says Lovett-Reid. “We’ve been in a relatively low-interest rate environment, so it’s made it very attractive for us to borrow.” Boomers have grown accustomed to living beyond their means, which isn’t necessarily wrong, as long as there is enough income coming in. The problem arises when it comes time to service those debts. “It’s taking the money away from the lifestyle you hoped you’d be enjoying, or maybe the one you became accustomed to enjoying,” Lovett-Reid says. “And that’s where the ‘living below your means’ would come into play.”
Lovett-Reid offers her own advice for today’s retirees through what she calls the five R’s:
- Re-assess how you feel about retirement—both emotionally and financially. “Retirement isn’t carved in stone. It’s not static. It’s very dynamic,” she says. “I think people need to appreciate that maybe what worked well last year isn’t going to work well for them this year, and that’s OK.”
- Re-unite with loved ones. Design a plan. Ask yourself: what is it you really want to do with your time? Who do you want to share it with? This can be an area of fear for some people, which is why it becomes helpful to have some structure to your day.
- Reward yourself. “I am shocked by the number of retirees who will say to me, ‘I’m still saving money in retirement,’” says Lovett-Reid. This is a time for spending, too. It’s about finding a balance. “I don’t want you to spend until it hurts, but I don’t want you to save as if there’s no tomorrow; because there will be a tomorrow, and this is your life.”
- Re-structure your life. Make necessary changes in what you are doing and how you do it. Go after the quality of life you have worked for.
- Re-position your life portfolio so it continues to work for you.
By Charlotte Bumstead