Make Retirement The Best Years of Your Life: The Best of Retire Happy Blog
By Jim Yih
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About this ebook
There are many other financial and investing sites that focus on minute-by-minute investment ideas, changing markets and fast paced trends. As the old saying goes, “Give a man a fish and he eats for a day. Teach a man to fish and he eats for a lifetime”. RetireHappy.ca is a site that focuses on practical, timeless information that can make a lifetime difference instead of a five minute difference.
This book is simply a collection of some of my favourite and most popular articles on retirement. As a result, the book does not have to be read in order; just pick a chapter, read it and reflect.
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Make Retirement The Best Years of Your Life - Jim Yih
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What is Retirement?
When you hear the word retirement, what do you think? Is it closing one chapter of life, and then opening another? Some might call it the best days of your life and, in many cases, retirement can be the best days of your life. Unfortunately, for some retirement is disappointing. Really, retirement might be thought of as a continuum between two extremes: The best days of your life and the worst days of your life.
Someone once said, Retirement is when you have too much time to do nothing
. Recently one of my clients described retirement as the time when you never do all the things that you intended to do when you'd have the time.
According to Gail Vaz Oxlade, TV Host, financial author and columnist, Retirement used to be the best time of our lives. That image has been blown apart by the reality that, for many people, with retirement comes illness, poverty, and loneliness. But it does not have to be that way. To have a successful retirement, we have to plan. After all, to be successful at anything, some planning is required.
Retirement is one of the most important crossroads we face in life. It involves a fundamental change in lifestyle – one that calls for a totally new outlook on how we approach each day. All our lives we have been conditioned to think in terms of saving for our retirement years. Society has created a myth about this time in our lives when we magically transform into different people with different lives. Really though, we are the same people with different day to day lives.
Retirement is supposed to be the 'golden years' of our lives. Theodore Roosevelt said it best: "Do what you can, with what you have, where you are."
Times are Different
Retirement used to be simple. You retired at age 65. You lived off your pension and government benefits and supplemented your income with your RRSPs. Back then, GICs were paying in excess of 10% and investment decisions were easy.
Today, it's not that simple. Interest rates are significantly lower. Tax rules are constantly changing. Social benefits are getting squeezed. Life expectancy is increasing. Retirement is happening sooner. Pension plans are becoming dinosaurs. There is more pressure on us as individuals to self-fund retirement. And to top it off, retirees today are facing one of the worst bear markets in history.
For the last 25 years, as interest rates have fallen, investors have slowly moved from renewing GICs into mutual funds and other investments with the hope of earning better returns in spite of the increased volatility. For a long time, this equation worked – more risk equalled better returns. Today, those same conservative investors are sitting with their retirement wealth in volatile mutual funds wishing they were in GICs, even at 2% and 3%.
The biggest challenge with retirement is the issue of uncertainty. We are not sure how long we are going to live. We need to balance living for the moment while we have the physical capabilities to enjoy the fruits of our labours versus keeping money just in case we get ill or live too long. We are also uncertain about the future of the markets. We need to balance getting higher returns without taking too much risk.
The Bottom Line
Retirement is a period of transition. You must change the way you think and act about money. While you were working and saving for retirement, you did not have to touch your savings. In retirement, it is now time to spend the money you saved. For many, though, it's not so easy to start spending money. Those with good saving habits sometimes have difficulty becoming spenders overnight. Those who are spenders have to watch the potential of running out of money too soon. Whatever the case may be, there are often many different emotions at this time of your life.
How to Cure Retirement Anxiety
Over and over again, every study I read about says no one is saving enough for retirement. I've heard this message so much that even I am starting to become desensitized to it. Is anyone else feeling the same way?
The truth is that I am tired of hearing this message especially when I see so many people successfully retire happy without having millions and millions of dollars in their RRSPs.
The Consumer Reports National Research Center recently surveyed 24,270 online subscribers age 55 and older about finances and satisfaction with their lives and found some common keys to peace of mind that had little to do with big salaries or high-living. Half of those with less than $250,000 in net worth were highly satisfied in retirement.
Ironically, I have had the privilege of meeting lots of retirees who have found a path to a happy retirement despite the doom and gloom in all the messages out there.
A Simple Cure for Retirement Anxiety
Anxiety is created because of the unknown. Your financial future is one of the biggest unknowns so it's no wonder why we worry about retirement.
The cure for retirement anxiety is simple: Start planning for the future. Many studies have suggested that 6 out of 10 Canadians have no plans for retirement. Are you one of those people? It's no wonder there is so much retirement anxiety out there. If you think about the word planning, it simply means looking into the future to make your future as predictable as you possibly can. It's all about figuring out where you stand, where you need to be and how to get there. Planning is the start of reducing retirement anxiety.
Retirement is Personal
There is no universal definition of a successful retirement. Retirement can be anything you want it to be. You simply need to figure out what you want it to be. Figuring out how much is enough should not be intimidating. There is no shortage of information, tools and resources to help you plan for your future.
Don't let these studies cause you to give up on your future. Stop making excuses and start taking action.
Principles of Planning
Here's the deal. I suspect happiness is important to you. Don't assume retirement will be happy, depressing or something in between. Plan for it. You've heard the old saying, people don't plan to fail, they fail to plan
. That's a big reason for retirement anxiety. Stop listening to all the noise
and the studies that are telling you that you are destined for Kraft Dinner, day-old bread and poverty.
Get off your butt and start taking the necessary steps to plan for your retirement so you take control of your future.
Remember: when it comes to planning, it's never too late to start. Even if your retirement plan does not leave you with the most desirable outcome, at least you know. More importantly, you can do something about it.
Planning is not the only way to reduce retirement anxiety. You can reduce your debts, save more money, increase your income, watch your spending and live within your means. Although these are great ways to feel more confident and financially secure, you still need to prepare for retirement to cure retirement anxiety. It all starts with planning. How will you know how much to save for retirement if you don't have a plan?
Do you have retirement anxiety? If so, what are you going to do about it? If not, why not? Help others get rid of retirement anxiety by sharing your retirement planning successes.
3 Steps of Retirement Planning
It's been said that 6 out of 10 Canadians have no plans for retirement. That's not a very encouraging statistic. Maybe that's the reason there is a lot of retirement anxiety happening in this country. Planning is the best cure for retirement anxiety.
So what is a retirement plan? What does it look like? Where do you go to get help creating a retirement plan? Unfortunately for too many Canadians, the financial industry is quick to jump to products as solutions for retirement planning. Too many retirement calculators jump to a number as the conclusion of a retirement plan: You need to save $2.8 million dollars to achieve your retirement dreams.
In my retirement workshops, I teach people that retirement plans are not products and retirement planning is not a number. Retirement planning is the action of looking into the future to make that future as predictable as possible. It's about looking at where you are today, where you want to be and finding the most desirable path to get from here to there.
At the root of retirement income planning are three basic steps to determining if you will have enough after-tax income to meet