Retirement planning —after you retire + MORE Jul 1st

It wasn’t long ago that turning 60 meant the countdown was on—just five more years of working until you could embrace a new life of leisure. Now, it’s likely you’ll still be going into the office well past 65. According to Statistics Canada, in 2005, less than one in 13 Canadians worked beyond the traditional retirement age. In 2015, that figure was at one in eight.
With more people working later in life, and with an ever-extending lifespan (Canadian life expectancy is now 82 years, up from 75 in 1990) the rules around investing and saving for retirement have started to change. Historically, investors would become more conservative in their asset mix as they aged. By the time 65 would roll around, they’d have a healthy allocation of bonds to better protect the cash they’d need to live on in their golden years.
Now though, with many continuing to earn money for longer, the old “100 minus your age equals what you should have in equities” rule is no longer relevant for many Canadians…

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While similar, retirement and what I like to call financial independence are not necessarily the same thing. The latter arrives when you have sufficient sources of passive income and assets accumulated that you can meet all your daily lifestyle expenses without having to continue to work. When that day arrives, you can create a life from which you have no desire to retire—at least not retire in a traditional sense.
Financial independence can come at any age. There are some frugal types who achieve this “findependence” in their 30s or 40s, although few of them stop working. Henceforth, they may wish to continue to work – but they will be doing so because they want to, not because they feel they have to, financially speaking. For most of us, that moment will come a few decades later.
These two concepts fit hand in glove, like the Chinese yin and yang. The yin is all the decades of work and wealth accumulation. The yang is the day you become “findependent” and create your new phase of life based on different priorities…

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Would-be retirees are often dismayed when they look at retirement projections based on today’s low interest rates and are told their choice is simply to work longer, increase investment risk and/or scale back their expectations of retirement. Sadly, champagne aspirations on a beer budget are not the recipe for a happy retirement.
But working longer need not be as unpalatable as it might seem on first blush. Governments around the world are doing what they can to encourage workers to stay in harness just a few years longer. They have our interests, as well as their down, at heart. They’ve seen the rising life expectancy stats and would prefer that we work longer and keep feeding tax coffers, while at the same time deferring the moment when we start drawing on our government retirement benefits.
The Stephen Harper Conservatives even tried to bump the qualification age for Old Age Security to 67 from 65, although this was later reversed by the Justin Trudeau Liberals. The Tories were on the right track; fact is, we are living longer and healthier lives, which is both good news and bad…

As they say, if you don’t know where you want to go, you’ll probably end up somewhere else. So it is with retirement, too. Retirement planning is a topic that’s almost ubiquitous in the financial press and mass media. Unfortunately, most of the coverage tends to be heavy on the financial side and how you need to build up sufficient wealth. This emphasis deflects attention from the critical topic of what you really want from retirement.
The prevailing question those still working ask their financial advisors is “How Much is Enough?,” which happens to be the title of a book by a B.C.-based financial advisor, Diane McCurdy. The all-too-common but sensible response to this question is “It depends.” How much money you need to retire depends, of course, on what your personal vision of retirement is. And too many of us don’t get that sorted until we actually retire.
This may seem a frustrating response but the fact is there is no one-size-fits-all answer to how much money you need to retire on, and when…

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Every human goes through a predictable life trajectory: literally from cradle to grave. In parallel with this is a financial life cycle that tracks our lives as we age, which is why MoneySense refers to the “Ages & Stages” of retirement planning. While everyone proceeds at their own pace, every decade should play its part in the financial lifecycle, from your 20s and right into your 90s and beyond if you’re lucky enough to live that long.
Let’s take a tour:
Your 20s: Building a Foundation for Financial Independence
The financial life cycle can begin in earnest as early as age 18, which is when you can start saving in a Tax-free Savings Account or TFSA. You don’t need earned income to qualify for the annual $5,500 TFSA contribution room.  In your 20s, you’ll be trying to finish higher education (ideally paying off any student debt), so you can get your foot on the career ladder. Some marry, enter the housing market and start families; others may defer this to their 30s and beyond —or never…