THE INSIDE SCOOP ON RETIREMENT
By Rick Hoogendoorn
ADJUSTING TO A LESSER INCOME
In one way or another, your income and expenses will change when you enter retirement. Some people are able to reduce the shock of this by preparing budgets, or even by easing out of their jobs over time.
CAROL: "I have been given a year, really, to sort out my retirement."
RICK: "That's lucky."
CAROL: "I'm very lucky, yes. I'm having, in this year, to go whole hog and organize my life so I'll be able to live in future on a considerably reduced amount of money which, I think, makes me a really good person to talk to because I'm not gonna walk into retirement with a salary that's similar to what I had when I was working. You know, I'm in the process of organizing my life so that I don't need money basically."
GINNIE: "It came about when I did my normal kind of spending that I used to, and I went 'hey, wait a minute, I'm out of money…and there's still 3 weeks until my cheque comes in! Guess I better do something about this…like spend less money.' And so, you see, I'm used to having the summer, and so you could barely count that and quite often I'd be out of money by the end of summer, which often teachers are, and then they bring out the VISA card, and then you spend your time paying that back. I would say, ya, it took me a few months for that to click in. I just don’t think you make the change that quickly in terms of spending habits. ' "
LORRAINE: "I ended up having more money in a month when I retired than I did before. And that
was a nice surprise because, as you're working and getting to retirement age, you always worry whether you're going to have enough to maintain the lifestyle that you were used to when you had a job. I was very fortunate because I had invested okay which is really, really nice."
RICK: "Was that because expenses went down?”
LORRAINE: "I don't think so. I don't think so. Because of income from investments and now government pensions that you get. I, for one, took the CPP early, and I've never regretted that. No, expenses were no different. I had more money after I worked than I did when I worked. Don't ask me how that works but it does."
CAROL: "Right now I'm planning, in the next two years, to cycle across Canada. That's a pretty exciting and inexpensive way of crossing the country, really, and seeing it. I hope to take three to four months. So I guess what I had to come to terms with was what are my requirements, realistically. Do I usually go to Hawaii every winter? No I don't. Do I want to start going to Hawaii every winter? Well, I would like to have that option to do it once in a while and what (my financial advisor) and I talked about, and what we've got, and I've now put completely in place is, she said every couple of years I could afford to take a cruise, or the equivalent. So even with the reduced income that I will have, I feel very comfortable that it's going to be adequate to easily meet my needs. My kids are probably not going to think so much of it because I've been very generous with them in the past, buying them things that they needed and being there to backstop if they needed cash and that sort of thing and that's going to have to stop. And they're just going to have to get used to it because they're not kids anymore so it's about time."
RICK: "What was the biggest surprise for you about retirement?"
JIM: "Not having enough money. I went out at age 59. I thought I had lots of time left until at least age 65 to offer something to the company, but they cleaned out mid-management in the smaller offices. Luckily for me I was able to do other things to supplement it."
CAROL: "I feel very comfortable that I'm gonna be fine. I'm not going to have a lot of money to throw around but the biggest fear that a woman has in retirement is that you're not going to be able to make it and (my financial advisor) was able to help me through that. I'm really glad she did because I would be worrying now if it weren't for that. I'd be worried sick."
RICK: "That may be why a lot of people don't retire much earlier than they do."
CAROL: "And your standard advisor will say 'well you probably need 80% of your working income' and this is why many think 'oh my God I'm never, I could work to be 100 and I'll never get 80% of my working income.'"
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