The Truth About Retirement

Often, we try to predict what our retirement will be like.  But, as that time draws near, we can easily fall prey to the many myths that surround what is supposed to be our golden years. It’s important that we learn the truth about retirement and dispel those myths.

Myth 1 – Golf is all you need.

Retirement is short. So book your tee time now.

In fact, your retirement will be 20 or 30 years and you’ll have plenty of time to whittle away your handicap. At the time Franklin Roosevelt created social security in the United States, life expectancy was only 68. Today a 65 year old can expect to live past 81 on average. These projections don’t take into consideration further gains in longevity that are almost certain as medical knowledge increases.

Myth 2 – You’re way past your “Best Before” date.
You’re all washed up at 65 or even 55 and your “Best Before” date is behind you.
Not so. While there are many occupations where youth and physical vigor are clearly related to job performance, older workers have advantages in many areas.  Remember, experience is a fabulous teacher and with gray hair comes wisdom.

Myth 3 – Make way for the younger generation.
You must step aside to create opportunities for the younger generation.
The fact is the younger generation needs you to keep working and paying those taxes and replacing Baby Boomers when they retire won’t be easy.  The groups following the boomers are substantially smaller in numbers. Already recruiters are finding there are not as many 35 to 45 year olds who want to try for the top jobs as there were just a few years ago. A buyers market will quite rapidly become a sellers market.

Myth 4 – The old gray matter just ain’t what it used to be.
You can’t learn new skills after 50 or 55, so you won’t be able to keep up with the knowledge-based economy.
Not so. In fact, you can continue to learn throughout your life as long as you develop and maintain your learning skills. If you’ve been fortunate enough to form the habits of staying informed, reading widely and discussing ideas with others, you can continue to learn. An increasing number of candles on the birthday cake is not going to stop you.

Myth 5 – You’ll last longer. So will your money.
Your savings, combined with Canada Pension Plan, will take you through to age 100.
Maybe not. We suggest that unless your pension is a big fat gold-plated government pension plan that’s inflation proof, it’s a good idea to examine your income sources. This would include your capital saved, and rates of return necessary to provide an inflation proof income for your financial independence. Investors should carefully look at ways to layer income, reduce taxes and stay diversified in institutional style portfolios, especially as means-tested benefits are introduced in the future for heathcare.  Many of us have to use our RSPs, which have witnessed a difficult decade. Baby Boomers, or at least the best-educated and most highly experienced of the boomers, will keep working until they’re 70 or 75, often for shear pleasure.

Myth 6 – Do you have a license for that wheel chair?
After 65 you’ll probably be physically or mentally disabled so you won’t be able to work.
Not so. In fact most boomers won’t be old at 65 and many will be fit and healthy well past 75. Stats Canada surveys consistently show that more seniors are living well into their 70s and 80s without disabilities. Seniors are staying healthier longer due to better health care, improved diets, more exercise and less smoking.

Myth 7 – Time isn’t on your side.
Filling up the time when you retire is a snap.
This may be true if all you want is to fill time, but most people want much more. People who approach traditional retirement for the first time have the challenge of being accountable only to themselves from 9 to 5. The self-employed have the most pre-retired experience in this area. Finding meaningful tasks to make your days fun and enjoyable takes careful planning - unless all you want to do is golf!

Planning a successful retirement takes more than just money. Take the time now to understand what you want your life to be like after retirement. Avoid the myths, and enjoy those years with a meaningful lifestyle that includes doing what you love with those you love.