How Much Do You Need for Retirement?
Peter Katevatis - Sep 14, 2017
For many hard working Canadians there is a lot of mystery around their future retirement. They have nearly paid off their home, the kids have completed university and they are in the twilight years of employment. The question at the forefront of th
For many hard working Canadians there is a lot of mystery around their future retirement. They have nearly paid off their home, the kids have completed university and they are in the twilight years of employment. The question at the forefront of their brain is “How much money will I need for retirement?”
Most clients focus on the big number… HOW MUCH?!? But to calculate that number properly we need to answer the YOU NEED first.
The first step is a simple current snapshot of your financial situation. This is not a detailed audit of your assets but simply a ballpark estimation of your current assets and liabilities. Secondary to that is an outline of current and future cash flow. This includes all the income you are currently generating and also the planned expenses you expect to have in the future.
When it comes to income and spending I find it interesting how clients have more trouble with planning spending over planning savings. Isn’t spending supposed to be the fun part?
The key to a successful plan that can maximize your fulfillment is to take the actual cost OUT of the equation. Start with “What do I want to spend my time doing?” or “What activities do I truly enjoy?” These are broad vague questions but they are instrumental on your future financial plan.
I have a client with a real passion for soccer, his blood pressure matches a soccer ball - 8.7 PSI. He is nearing retirement and is looking forward to closing the chapter of his working life, “I’m out baby!”. Not wanting to be part of soccer’s organizational politics he has decided to become a fulltime (retirement-style) referee. This will keep him engaged with the sport he loves, physically fit, and hopefully help a future generation of Canadian kids & adults build their love of the sport. Your retirement doesn’t have to be golf and gardening, not that there’s anything wrong with that.
Once your future goals are planned we work together to make some future cash flow needs projections. Depending on estimated retirement age we then calculate your retirement needs using cash flow modelling. The How Much question will get answered with a few variabilities and sensitivity. What if I retire at 60? 65? 72? What if my portfolio returns 5%? 7%? -2%? All the numbers can be managed to suit your specific needs and calm your worries.
Let’s start today and build your plan.