It’s a new year and that has many people making resolutions. Some are working on getting fit and eating better. Others are levelling up on their skills or spending more time with family. But what if your New Year’s resolution is to retire? How do you know if it’s the right time to make the leap?
If you’re wondering if it’s the right time to retire, you’re probably looking at your savings and investments and evaluating if you’ve saved enough. You may be considering the economy and questioning whether or not your retirement can succeed in the current conditions. You may also be looking at the political landscape. What impact will Trump’s election and Trudeau’s resignation have on Canada? What impact will these events have on your retirement?
But retirement isn’t a political decision or an economic decision. It’s not even primarily a financial decision. At its core, retirement is a lifestyle decision.
We have worked in the investment industry for a long time, and we’ve found that while many people know how much money they’ve saved for retirement, very few have a clear picture of what that money can do for them.
How to build a vision for retirement
Having a clear picture of your retirement sounds great, but where do you start? Try answering these four questions:
- What’s on your bucket list? Maybe it’s taking that trip you’ve always dreamed about, but never had the time to take when you were working. Maybe it’s finally overhauling your backyard so your family can spend more time there together.
- What do you want to accomplish? Retirement may be a time to slow down, but you don’t have to stop learning or growing. Consider taking a class, volunteering, or becoming a mentor to someone just starting out in your career field.
- What do you want your day-to-day life to look like? Retirement isn’t just an extended vacation. It’s not all travel and golfing. Think about how you actually want to spend your time. Think about who you want to spend it with.
- What do you want to pass on to the next generation? This can include assets or sentimental items that should be accounted for in the estate planning process. But it could also include family values or stories that you want to impart to your loved ones.
Take a moment to look back over your answers. Is a pattern emerging? Are your answers consistent with your values? Do you feel more focused on what’s really important?
Once you’ve identified your goals for retirement, it’s time to start planning.
Goals-based retirement planning
Now that you have a vision for retirement, you’re ready to sit down with your advisor and build a plan to make it happen financially.
A good plan will not only give you an idea of whether or not your lifestyle goals are achievable, but it will also tell you where your gaps are and what you need out of your portfolio to make it all happen.
This is where investment strategy comes in. How can you structure your portfolio to meet your goals? Our team does this with a strategy that designates groups of assets to achieve one of four main goals:
- Providing the income you need to maintain your lifestyle;
- Growing your portfolio so you don’t have to worry about running out of money;
- Ensuring that unexpected healthcare costs are covered;
- And, planning for the legacy you want to leave for your loved ones.
Structuring your investments to achieve these important goals, and having the discipline to stick to your strategy, will set you up for success in the long run.
Financial plans shouldn’t be set-it-and-forget-it
Your goals aren’t set in stone, so your financial plan shouldn’t be either. As your life changes – you want to travel more extensively or help your children buy their first home, there’s a change in your health, or you welcome grandchildren into your family – your plan should evolve with you to ensure you’re still on track to reach your goals.
Your wealth advisor is there to make sure your financial situation is set up to support your life, not the other way around. So you should be meeting regularly to review your plan and update it as needed.
So, if you’re beginning this year already feeling tired and wondering if 2025 is the year you finally retire, start thinking about what you want to get out of the experience and then talk to your advisor about how to achieve the lifestyle you’re envisioning.
David Popowich and Faisal Karmali are Investment Advisors with CIBC Wood Gundy in Calgary. The views of David Popowich and Faisal Karmali do not necessarily reflect those of CIBC World Markets Inc. This information, including any opinion, is based on various sources believed to be reliable, but its accuracy cannot be guaranteed and is subject to change. CIBC Private Wealth consists of services provided by CIBC and certain of its subsidiaries, including CIBC Wood Gundy, a division of CIBC World Markets Inc. The CIBC logo and “CIBC Private Wealth” are trademarks of CIBC, used under license. “Wood Gundy” is a registered trademark of CIBC World Markets Inc.
