Can you afford to retire? How to get your finances retirement-ready

It’s never too late to make smart financial decisions for retirement. That’s true even – sometimes especially – in the last five years before leaving the workforce. Your past savings, present investments and future retirement income have set the stage. Now is the time for some crucial decisions. Tick these off your to-do list.

1. Fine tune and think strategically. Financial plans are ongoing. You’ll likely have an even better sense of your retirement goals, assets, and possible expenses.  With that,  make some final pre-retirement financial tweaks. Should you make the last push in RRSPs? Splurge while you have disposable income? Re-allocate assets? Downsize before or after retiring? Or at all? Check in with your financial advisor to discuss all of the implications. With just a few earning years left, ensure your plan still fits. That means updating your saving, spending and tax-efficient withdrawal strategies as needed, says Doug Lamb, a Toronto-based certified financial planner.
2. Try to pay off debt. Margaret Coleman, District 11, Waterloo was on track to carry her mortgage into retirement. So she accelerated her payments. Coleman never missed the extra money coming off her account, and three years before retiring she was mortgage-free. “Getting that paid off was the best thing I did,” she says. She also anticipated a future expense – replacing her aging car, which she owned outright. For the last three years of her work life, Coleman contributed the equivalent of a car payment every two weeks into a tax-free savings account. She saved $11,000, which she put towards a new car after she retired. Great advance thinking to cut down a debt.
3. Seek advice widely. Go beyond your financial advisor to test drive your plans. Take advantage of retirement seminars, and pick the brains of friends or family who’ve already retired. “It’s a whole different world, and you’re trying to get your head around it,” says Coleman. Rick Atkinson, author of the book Strategies for Retiring Right, says people should create a thorough retirement vision – their financial picture, and also what a balanced lifestyle looks like. How will they maintain their physical, mental and spiritual health? What will make them happy? Then run that vision by a small and trusted circle.
4. Consider how continued work fits in. Lamb defines true retirement as the point where you no longer rely on work for money. That has ramifications on your plans. Many people choose to keep working after retiring from a career, maybe part-time in the same field or in a whole new area. There’s a difference, however, between working for extra pocket money or to make ends meet. Play with different scenarios around your revenue and spending, says Lamb.  If your plan isn’t viable without more income, and you’re not willing or able to cut expenses, think about delaying retirement.
5. Be flexible. With people retiring younger and living longer, you may have to fund a retirement that lasts decades. Your goals may have timelines. Yet those can shift, and you need the funds available to adjust. Coleman had a heart attack a year before she retired, and didn’t take anything for granted. She decided to front-load some of her big spending, taking early CPP and travelling to Russia, Turkey, India, and Peru. “I wanted to kick things off my bucket list,” she says. To make the best financial choices, think carefully about what you really want to do in retirement and at what stage. Now that you can see the finish line, all of your plans come into sharper focus.

Retiring in the next 5-15 years? Sign up for a Retirement Planning Workshop