Importance of a Comprehensive Retirement Plan

As Sir Winston Churchill famously said, ‘He who fails to plan, is planning to fail.’

Imagine boarding an airplane and settling into your seat when you hear the pilot announce ‘Ladies and gentlemen, on today’s flight we are going to try something a little different. Instead of plotting an actual flight path and using our navigational equipment during our flight and planning a detour around the stormy weather that may be ahead and trying to find the most fuel- efficient air space, I’m just going to wing it. Don’t worry though…I’ll still get you to your destination and of course, I promise I’ll get you there on time.’ Following that announcement, chances are passengers will be rushing to the exit door of the aircraft before the pilot has a chance to get too far down the runway.

In any endeavour—your retirement most certainly included—you need to plan to achieve a desired outcome. Rarely, does it just happen. Certainly, we hear of stories where people do not prepare in any way and yet, they somehow manage to get by but, the reality is they are the exception rather than the rule. Besides, when we are talking about something as important as your retirement, do you really want to leave it up to chance or hope for a fortuitous circumstance or adopt an ‘I’ll figure it out as I go’ type of approach? Having to constantly wonder whether or not you have enough money does not sound like a peaceful or enjoyable way to spend your golden years.

A far better approach would be to take control of your affairs and actually plan for your retirement. A Registered Retirement Consultant® (“RRC®”)/Conseiller en Retraite® and Conseillère en Retraite® (“CR®”) will have the knowledge and competence to guide and advise you and can devise a comprehensive retirement plan to set you on the right path for a happy and financially stable retirement.

Benefits of a comprehensive retirement plan:

  • Of course, there are never any guarantees in life and unexpected events and circumstances can always pull you off your course however, having a planned approach dramatically increases the likelihood that you will be able to withstand the stormy times and remain on track to achieve your goals.

  • With retirement, the last thing you want is constant stress about your financial situation and insecurity about whether you are going to be able to pay the rent next month or to feed yourself. A comprehensive retirement plan provides greater clarity, certainty and predictability about your situation. Predictable may sound boring but, in the context of your finances in retirement, boring is a good thing for most people.

  • Retirement is far more than just no longer working—it is a mindset. Most people have given little thought to their retirement and how they will spend their time...and time, is the one thing they will suddenly have in abundance. As part of constructing a detailed retirement plan, a Registered Retirement Consultant/Conseiller en Retraite and Conseillère en Retraite will put the qualitative aspects of retirement front and centre so, that your focus is not just on retiring but, on maximizing the quality of your retirement.

  • Those who have thought about their retirement, view the next phase of their lives as an opportunity to experience things they may not have been able to pursue during their working years be it due to a lack of financial resources, a lack of time or because it was pre-empted by career and family obligations.

    The prospect of retirement gives people an opportunity to let loose and dream. The harsh reality however is that doing what you have always wanted to do, like travelling to exotic destinations and pursuing various hobbies and ticking off items off your bucket list, can prove to be an expensive proposition.

    Working with a Registered Retirement Consultant/Conseiller en Retraite and Conseillère en Retraite to develop an all-encompassing retirement plan will enable you to separate the items on your wish list that are realistic, from those that might best be left as simply wishes. Importantly, you will have this understanding before you have dipped into your savings and compromised your financial security.

  • With guidance from a Registered Retirement Consultant/Conseiller en Retraite and Conseillère en Retraite, your retirement plan will allow you to assess your present situation and make projections in relation to your stated retirement objectives. Where there is a gap, the plan will allow you to come up with an acceptable compromise whether that means increasing your current level of savings, reducing your income expectations at retirement or deferring retirement.

    On the other hand, your retirement plan may reveal that you are in a more favourable situation than you anticipated. This will allow you to rethink your stated retirement objectives in a positive way or to loosen the reins on your finances leading up to retirement so you can enjoy life more now or perhaps even raise the prospect of leaving a legacy.

  • Unfortunately, what often passes as a retirement plan is a one dimensional illustration that focuses on the accumulation phase. In other words, how much money do I need to set aside during my working years such that it will provide me with a constant stream of income to fund my retirement?

    The reality is that your income needs are not static during retirement any more than it was static during your working years. You had different cashflow needs and access to different levels of cashflow when you first entered the workforce in a meaningful way in your mid-20s versus when you started a family and became more established in your career in your 30s and 40s versus the final 10 years leading up to retirement.

    Similarly, there are different phases of retirement with potentially varying income needs in each phase. As part of a comprehensive retirement plan, a Registered Retirement Consultant/Conseiller en Retraite and Conseillère en Retraite, can help prepare you for the different stages of retirement that you are likely to encounter.

    For example, there may be a greater need for income in the early years of your retirement when you are at your healthiest and you have a strong desire to pursue your retirement objectives such as travelling. By your mid-70s, your preference may be to remain at home more often however, there may also be the onset of medical conditions that create an unforeseen expense. In the advanced stages of your life, there may be a significant reduction in lifestyle and discretionary expenses however, a strong likelihood that expenses will nevertheless increase to cover healthcare costs whether it is in the form of actual treatment for a medical condition, the need to hire an attendant to help you with your daily activities for as long as you are able to stay at home or being forced to move into a nursing home or care facility.