To create an effective retirement plan, it’s first necessary to plan your retirement. What do you see yourself doing once you’re no longer tied to a work schedule? 

You might be surprised to learn that many people continue to work or even return to work. In fact, according to a recent Scotiabank survey, 25 per cent of affluent Canadian retirees are currently working part time.   

For some, working in retirement is a conscious decision, and simply the next stage in a comprehensive life strategy. However, according to the survey, of the main driving forces for the decision, 82 per cent of respondents stated a desire to remain mentally active, 65 per cent cited the need for social interaction and only 31 per cent reported financial necessity. 

Many people who are in a monetary position to retire comfortably simply haven’t taken the time to set up alternate ways to meet their mental and social needs. Of the retirees surveyed, 40 per cent claimed to have done very little or only some retirement planning. The key to avoiding financial or psychological disconnect is to think ahead. 

Step by step

Now is a good time to start thinking deeply about what you’ll need to do in retirement. Here are some helpful techniques: 

Break it down. Planning for a retirement that spans 30 years can seem daunting. To make the process more manageable, break it down into shorter planning periods of, say, five years. This gives you a more manageable time scale, and also recognizes that your lifestyle is likely to change as you get older. For example, you might plan to work part time for the first five years as you “ease” into your retirement, then you might plan to travel extensively for the next five-year period. 

Rate your priorities. Things that are important to you now will continue to be important to you – for example, spending time with your family. 

Consider health issues. Your health is likely to influence your retirement lifestyle decisions. For example, you may want to spend the winter months in a climate less physically challenging than Canada’s. 

Learn from others. Since retirement is uncharted territory for you, it can help to look at the plans others have made. Review the retirement strategy of friends and relatives and consider how these would work for you, in terms of both lifestyle and money. But remember that retirement is very personal – what works for your best friend may not necessarily be the right decision for you. 

Derek Weisbeck is a Wealth Advisor with the ScotiaMcLeod branch in Edmonton and can be reached at 1-800-661-7137. His column on investment and current financial market conditions will appear weekly in the Fitzhugh.