You’ve had a job for your entire adult life, raised your kids and most likely have paid off your mortgage. Your retirement is ahead of you and it can really be the best years of your life. So what makes the difference between a happy retirement versus a retirement filled with stress? I recently asked a few people who have already retired what kids of things they thought were keys to having a happy retirement. This is the list that I came up with after some careful considerations:
Determine what you need, and what goals you need to achieve, in order to retire. It’s important to devise a plan that will help you accomplish this goal. Many people fail to plan their retirement properly which can lead to stress and worry in your retirement years.
Make conservative assumptions
Assumptions will likely be an important part of your retirement plan. When making assumptions it’s always a good idea to leave room for variability or margins of error. For example, do not assume that your investments to return a large sum of money that you will depend on as a major source of income.
Have a diverse portfolio
Make sure that you have a diverse portfolio of investments. For example, having a diverse portfolio of GICs, bonds, equities and income trusts will help you at times when stocks are losing money by balancing your asset classes.
Account for inflation
Inflation will affect your income in retirement whether you like it or not. You will find that as the years go by your costs will increase steadily and you may have to make some adjustments to your income. Everyone planning their retirement should be accounting for higher living costs.
Develop hobbies and interests before retirement
We all look forward to not having to do anything, but that will get old fast and you will find yourself with too much time on your hands. Keep busy in retirement with hobbies and interests; it will make you much happier. Planning what you want to do with your time will help prevent getting stuck in a rut when you actually retire.
Understand your retirement income
Where are you going to get income for retirement? An important thing that should be done by everyone planning their retirement is to become aware of the rules surrounding government benefits. Everyone should know everything they can about their sources of income whether it is pension plans, RRSPs or government benefits.
It’s easy to get caught up in worrying about the safety of your investments in retirement, but people often forget to focus on minimizing tax. Good tax planning can make a tremendous impact on your retirement.
Be conservative with your investments
Sometimes it’s better to stay conservative and live a modest life than to go with investments that have a higher potential for returns (these types of investments also have higher losses). Just make sure you are able to sleep at night with the investment plans that you have chosen. Retirement is about living a comfortable life with what you have.
Live a healthy life
This should be obvious, having a health problem early into retirement is not something that you should have to worry about. Be conscious of what you eat and remain physically active. The healthier you are the longer you will live and the more you will enjoy your life. Money is nothing without health. You only get one body, take care of it.
Be happy with what you have
It’s easy to get caught up in the wants, but when it comes down to it, if you are having all your needs met in retirement that is a tremendous reason to be happy.