Managing Your Money

I recently congratulated long-time clients on successfully achieving “retirement”.  I put retirement in quotations marks because retirement is being redefined these days, as their situations will show. They came in to discuss and set-up their retirement “pay cheque” – or, in other words, how they would be withdrawing income from their savings. Jake retired a few months ago, after almost forty years with a large company and Diana was just now retiring, earlier than planned, from a high-pressure job where she no longer wanted to deal with the stress.

We started working on their “retirement” plan about 15 years ago, when it seemed so far away.  The objective of their plan was never to “stop working”, it was to have “the option” to stop working, or basically to become financially independent. Financial independence is achieved when you have enough income from pensions, real estate, or investments to support your lifestyle without having to work. This plan of financial independence is what most of my clients today are calling “retirement”. They’re redefining the retirement of the past when people stopped working at 60 or 65 and turned to hobbies or puttering around the house, and they are creating a “Part II” to adult life, that usually involves using their experience and skills, living their passions, or helping others.

Jake came in to our meeting excited about a part-time job he got at a golf club. Diana had seen a local job ad and knew it would be a perfect way for him to keep busy over the summer.  He gets to play as much golf as he wants and works flexible part-time hours. The funny thing was that Jake was commenting on how some of the members act so “rich and fancy” which made me laugh because knowing some member who play at that club, I assured him that he is in a better financial position than most of them. He’s not working because he needs the money, he’s working because he needs the stimulation. He gets to interact with people, play a sport he loves, and has a commitment to which he shows up. Diana who is just retiring, is planning to take some time off to recharge, then seeing what happens.  At only 61, she sees herself doing something else, but is not sure what.  Since money is not a concern, she may end up volunteering or consulting part-time, or just trying something completely new.

This Part II is often income generating, but when you’ve achieved financial independence, it’s no longer about the money and therefore doesn’t have to generate an income.  It often becomes about finding a new sense of purpose. There is a great deal of freedom that comes when entering this stage.  Those who achieve financial independence and continue to work do so because they choose to, not because they need to survive. I have seen clients work well into their seventies and eighties with a true sense of balance and enjoyment. There are some key elements to achieving this Part II successfully.

Financial Health:

Financial Health is not just about having money, it’s about having money and a good plan! Aside from basic financial projections, a plan will help navigate the unknown and unexpected “what ifs” to get you to your Part II and to live comfortably through it. Regularly reviewing how your reality is following your plan will help avoid living through financial difficulties that could often be prevented. Managing a good financial plan could be compared to getting regular medical checkups. If you don’t bother getting your health checked because everything seems fine today, you may be missing warning signs (i.e. blood pressure, x-rays, blood tests, etc.) that could avoid a major health issue tomorrow. This leads me to Physical Health.

Physical Health:

I have sadly heard of more than one case where a hard-working person finally takes their well-deserved retirement only to suffer a heart attack or stroke soon after.  Living a successful and enjoyable Part II is going to require a certain degree of physical health.  Developing good health habits is never easy and is best to start early with small lifestyle changes.  I have often heard “I will get in shape when I retire and have more time”, but I have not often seen that happen.  Taking control of your health early, making healthy dietary, fitness, and lifestyle changes, and keeping up to date with medical tests and check-ups will significantly increase your chances to have physical freedom in your Part II.  Whether it be a passion for certain sports like golf or tennis, working or volunteering in a way that requires physical stamina, or simply feeling energetic enough to live your best Part II; your physical health will be key!

Psychological Health:

Throughout my career I have helped many clients, who are excitedly ready for retirement, or Part II, through this transition.  I have also seen clients hanging on to their careers, and not necessarily because they love the work. Some people fear retirement (or the transition) because their work forms such a big part of their identity, they worry about no longer feeling valued, they’re scared of boredom, and/or they just don’t have a plan for Part II.  I often start discussions on this in the initial stages of retirement planning by asking questions like “What did your parents do when they retired?  How would you like your retirement to look?  What kinds of things would you love to do if you had the time and the money?”, and so forth, to get them thinking about all the possibilities that exist for Part II.  Finding a new sense of purpose, becoming valued in a whole new way, continuing to use skills and experience, and creating a life of inspiration and passion are all possible.

Retirement is not viewed the same way as it was 25 years ago when my dad retired. But it also takes more planning that it did back then. So, regardless of whether you’re in your 30’s or 70’s, or anywhere in between, it’s never too late or too early to plan ahead – financially, physically, and psychologically.  Then continue to reevaluate your plan with your reality throughout the process. Engage professionals who can help keep you on track in those areas that may be more difficult to manage on your own – Financial Planner and/or Investment Advisor, Medical and/or Natural Health Practitioner, Psychologist and/or Life Coach. Working with professionals who have witnessed pitfalls can help you avoid these difficulties from happening to you.

“The best laid plans of mice and men have often gone astray”, so stay on track.

Lynn MacNeil, F.PL. Vice President, Investment Advisor, is a Financial Planner with Richardson GMP Limited in Montreal, with over 22 years of experience working with retirees and pre-retirees. For a private financial consultation, or more information on this topic or on any other investment or financial matter, please contact Lynn MacNeil at 514.981.5795 or Lynn.MacNeil@RichardsonGMP.com.

The opinions expressed in this article are the opinions of Lynn MacNeil and readers should not assume they reflect the opinions or recommendations of Richardson GMP Ltd. or its affiliates. The comments contained herein are general in nature and are not intended to be, nor should be construed to be, legal or tax advice to any particular individual. Accordingly, individuals should consult their own legal or tax advisors for advice with respect to the tax consequences to them, having regard to their own particular circumstances. Richardson GMP Limited, Member Canadian Investor Protection Fund.