Categories: Retirement Planning | Published On: March 16, 2022 |

Preparing for Retirement in Canada

6 minute read
Preparing for Retirement in Canada

So retirement is here, or just around the corner! Wow. We’ve all likely imagined our retirement over the years, possibly with mixed feelings. As retirement shifts from a distant dream to a reality, we’re faced with an abundance of questions and unknowns. 

It’s normal to have a mix of emotions and conflicting feelings as you plan for retirement. You might be excited for a chance to travel, relax, spend time with family, or try new things. But you may also feel overwhelmed by this huge life milestone. Entering retirement can make you feel like an uncertain teenager all over again. What comes next? How can you plan for an enriching retirement? Are you financially ready to retire? Let’s explore the practical, financial and emotional challenges that retirement brings, so you can enter this next phase of life with confidence.

5 steps for a successful retirement

Here’s how to break down your retirement planning into five clear stages.

1. Establish a vision for retirement.

Think about the kind of lifestyle that appeals to you. Explore your personal values, goals, and ideas for an enriching retirement. Let yourself envision the retirement you want.

2. Build a retirement timeline. 

Establish when it is reasonable to retire based on your practical, emotional, financial, and logistical needs, and begin to create a plan that helps you move towards this goal.

3. Clarify realistic financial plans

This step is in tandem with the step above, because your financial goals need to align with your retirement timeline. Create a spending plan to establish your retirement budget. Try it out to ensure that your financial limitations suit the lifestyle you want. It’s also a good idea to work with an advisor to narrow down the details of your plan.

4. Get into the details

Consider whether you plan to move homes, start a new course, look into part time work, or make other changes you can put into place now. Get the gears in motion ahead of time, so  the wheels are greased and ready to go when retirement officially begins.

5. Walk through the door into a new stage of life. 

This is a time of transition, but it’s also an exciting opportunity to rediscover yourself, the world around you, the communities you can join. The journey starts now.

A senior couple walk along the beach in their retirement

How to create a holistic retirement plan

Planning for retirement involves emotional, practical, and financial components, which means  it’s never too early to start building a retirement plan. 

What is your retirement vision?

It can be helpful to understand the kind of values and goals you have for retirement before you get into the practicalities of planning. Once you know what you want, you can assess what’s financially and practically possible to build a realistic vision. Knowing what you ultimately want and considering the nuances of that ideal can help you plan accordingly.

What are some good retirement questions?

Ask yourself these retirement questions and write down your answers:

  • What are the things you’ve always wanted to do that you haven’t had time for? What goals are on your life list that you haven’t yet experienced?
  • Who else will your retirement affect? How can you prepare in a way that makes this transition smooth for both you and your partner, or family members?
  • If you imagine your ideal retirement without worrying about what’s expected of you by others, what vision comes to mind?
  • Do you like the idea of an open schedule with no set plans? Or might it feel good to keep some part-time work or a rich volunteer/community life to ensure you feel engaged and connected?
  • If you have a partner or a family, what are their future plans? Do your retirement dreams align or contradict each other?
  • What does an ideal day in your retired life look like? Are you active in your community, do you live by the beach, or do you live in the same place you do now?
  • What are your fears or worries about retirement? Take time to write them all down, however big or small, without judgement. Don’t try to solve them right now or deem whether they’re reasonable; just allow room to acknowledge they exist.
  • What words come to mind when you envision your ideal retirement plan? Here are some ideas: active, creative, peaceful, renewing, meaningful, activism, community, exciting, educational, adventure, healing, health, balance, family, spirituality, and fun.

A senior woman plans out her finances for retirement

Practical and financial considerations for retirement

Now that you’ve explored how you feel about retirement and what you envision, let’s get realistic and logical about our retirement plans. Does it feel financially, emotionally, and physically wise to stop working at the retirement date you’re considering? Can you afford the plans you’ve made? Perhaps there’s room for compromise, or you may  need to save for a few more years before your next chapter begins. Consider whether you’re able to afford the plans you have and how your financial needs affect what comes next:

  • If you established goals in the initial daydreaming stage of retirement planning, what are the practical steps you need to turn them into reality? For example, if you’d like to spend winters in Florida, do you have friends who also adopted a snowbird lifestyle? What are the practical steps and expenses to think through in order to make that a reality? It’s important to explore health insurance costs and rental or home prices in your dream destination. If you’d like to go back to school, start looking at programs to see what the costs are and when enrollment begins.
  • What financial goals do you have for retirement? If you have children or grandchildren, you might dream of paying for their wedding or helping establish a fund for your grandchildren.
  • Create and implement a retirement budget trial run, so you can see what it’s really like to live on the retirement budget you’re considering. Are you able to live comfortably within these means?
  • Talk to friends or family. If you know someone you trust who has been through this phase of life, it’s great to discuss what they learned. What do they wish they’d considered? Talking about money can feel funny, but opening a dialogue about saving for retirement can be a great way to pick up some tips and tricks.
  • What surprise costs might arise in retirement? You’ll want to consider surprises like a loved one experiencing health issues or facing financial struggles. Discuss your retirement plans with your partner or family to make sure you understand their needs and factor in costs that you might not anticipate. If you’re counting on part time work to make ends meet, consider how your own health could affect these plans.
  • What financial legacy or assets do you hope to leave behind? Part of your legacy can be the financial resources you’re able to access or leave behind to support loved ones. Explore financial retirement planning to plan for the legacy you want to leave.
  • Where will you be saving money in retirement? As you’re planning, don’t forget about the money you’ll save. Perhaps your daily commute to work involves a transit charge or gas costs, or weekly client lunches that add  up over time. You may no longer need to  rent  an office space or studio you use, and you may find it easier to cook meals at home rather than grabbing pricey takeout on the drive home. Work supplies, uniforms, and tools are all costs that you may not need to pay for anymore once you retire.

Read more about how to financially prepare for retirement

A retired couple meet with a financial advisor to discuss their retirement budgets

Meet with a financial planner

An experienced financial planner can help ensure  you don’t miss a step and are fully prepared for retirement. Now that you’ve established a general picture of how your retirement might look, it’s a good time to seek support to work through the nitty-gritty elements of retirement planning. Here are some great topics to discuss with your financial planner as you anticipate retirement.

  • What tax strategies will you use in retirement? Spousal income sharing and strategic use of RRSP (Registered Retirement Savings Plan) savings can help you save money and avoid breaking any rules. If you’re considering wintering in a warm place, think through how months abroad might incur costs like international taxes or private healthcare bills.
  • Consider your will and power of attorney planning. Estate and will planning are important ways to manage your financial legacy as you transition to this next phase of life. Knowing that you’ve accounted for what you will leave behind for those you love, allows you to feel secure in your financial legacy.
  • Will you downsize your home? Depending on your situation, it may be wiser to stay put, choose to downsize, or relocate to a place that’s closer to family or makes more sense for your new lifestyle.
  • How will your investments and financial strategies affect retirement? Getting a birds-eye view of debts, savings, and investments is essential to building a full picture of your financial future.
  • Does continued work make sense for you? Based on your financial goals, will supplemental income or part-time work be helpful or necessary if you retire when you currently plan to? How many years would you need to work, and what kind of salary would you need to retire comfortably?
  • Calculate your retirement cash flow and build a budget. Understanding your financial limits and plans for retirement will let you enter retirement with confidence and a clear sense of what your possibilities and limitations might be. You can then use your expected cash flow to see if it suits the lifestyle you envision for retirement.
  • Try consolidating your savings. If you have accounts at several financial institutions, rethinking how you manage your money can make it easier to save and keep track of how your savings are performing. Remember that you can transfer Tax-Free Savings Accounts (TFSAs) and Registered Retirement Savings Plan (RRSP) assets tax-free.
  • How will your debts or outstanding payments affect your future financial plans? If you’re in the pre-retirement stage, make sure you see any debts you owe all together in one place, so you can build a practical plan to pay off anything that’s outstanding. 
  • Learn more about Registered Retirement Income Funds (RRIFs) . Like RRSPs, these are registered with the CRA and allow for tax-free retirement savings.

A senior couple celebrate retirement while singing in their kitchen

The first months of retirement

Getting started as a retiree can be a big adjustment. It’s normal if these first few months of retirement feel awkward, thrilling, awful, or bring up a range of emotions. Here’s how you can prepare and what you can expect.

Give it time

Don’t worry if it takes you a year or two to settle into a new routine or establish what a retired lifestyle looks like for you. Give yourself time to explore and remember that you can always steer the ship in a new direction. For some people, retirement can last several decades––what works for you in year one might be different than what works 15 years into retirement.The most important mission is to find a sense of purpose and direction that feels right for you. 

Build a routine

If you’re used to daily work routines, it can help to create new intentional habits and practices that you do at the same time every day. This could include simple actions like a daily walk in the park, a morning cup of tea, a show you watch weekly, an online class you sign up for, or watering the plants at the same time each week. Remember to involve friends and family in your schedule, so you have social engagements to look forward to.

Set new goals

For many of us, our jobs were an integral part of forming our identity or moving through life with a sense of purpose. It’s natural to feel aimless when suddenly given the opportunity to pursue anything that interests you. Setting new objectives and learning new skills is a brilliant way to build new muscles and get inspired. Keeping a sense of purpose is integral to an enriching life, so create objectives and celebrate each win. These can be big like completing a degree, growing your own vegetables, taking a special trip, or running a long distance. But goals can also be small like learning to bake, cooking something new, joining a book club, or finishing an art project you’ve dreamt about for years. Keep your financial goals fresh too, and check in with your advisor regularly to see how your investments are performing and to update your financial legacy.

Have fun

With all of the planning and a looming sense of change, dit can be easy to forget that retirement can be incredibly fun and inspiring. Keep pursuing your passions! For example, if you worked as a professor, perhaps being outside the confines of academia will allow you to focus your research on an area that’s always intrigued you, like in this story about a retired palaeontologist. If you want to challenge yourself, why not try a new dance class with friends, sign up for beginner ballet, or spend a day wandering in nature? Take a healthy risk by signing up for a new activity or joining an online dating app. Although there are many unknowns, you’ve also worked hard and this is the time to enjoy a new world of possibilities. 

Try things out

If you want to spend winters in Costa Rica or are passionate about volunteering four days a week, consider a trial run to see how the experience lines up with your retirement expectations. Take a longer vacation now to see how you feel when your schedule is wide open, or try taking night classes to see if an area of study you’re curious about is still appealing when you’re immersed in it every day.

Move your body

Building strength, balance, and endurance can be a great way to tune in and invest in your physical and emotional wellness. Try online strength classes for seniors to inspire new confidence and take note of what forms of physical movement feel good to you. Building muscle makes everyday life feel better. You’ll see the benefits of your hard work when you pick up your groceries, your grandkids, or your favourite cat after several weeks of strength training. If you have physical limitations, don’t let that stop you! Try an online chair yoga class or Tai Chi class for older adults to get started.

Be open to surprises

If there’s anything we’ve learned by the time we’re ready to retire, it’s that life throws an abundance of curveballs our way. Even the perfect retirement plan will have surprises. Know there will likely be detours along the way along with many factors that you can’t control, even if you’ve thoughtfully planned your financial well-being and health goals.

Studies show that goal-setting, combined with a flexibility to change, are two keys to a fulfilling retirement. Accepting each stage for what it is and pivoting when necessary will keep you from trying to control what you cannot. Be ready to surprise yourself, as well. Our ideas about who we are can change in retirement––you may discover new and beautiful parts of yourself that you never imagined existed

Discover a new world in retirement with Boomerang.

Retirement is a challenging and exciting phase of our lives. With Boomerang, retirees or semi-retirees can register for a variety of wellness classes each month, giving you plenty of opportunities to find your new passion. Knowledgeable instructors are here to guide you on your way to living your best life. Sign up for Boomerang to get started!

Looking to start a new wellness routine? Explore all of Boomerang’s classes today.

This article offers general information only and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or its affiliates.

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