And that’s about as
far as you’ve managed to get …… beginning to plan. And you’re anxious and just a little
confused about exactly what “planning” for retirement actually means.
Well, may I be of
aide and assistance?
I retired in the
fall of 2012 with 31 years of career employment behind me and (hopefully) many
years of career retirement ahead of me.
Like you, I knew I needed a retirement plan, something above and beyond
the usual financial seminars. A
number of years prior to my official retirement date, I started “planning”
anyway. Or at least, I started getting ideas
down on paper.
And now with that
self-same “plan” and 15 months of early retirement in hand, I think I’ve actually
learned a thing or two about how you do this retirement-planning thing! And I would very much like to share with you
what I’ve learned!
Before we get started …
I need everyone to know up-front that I am not a financial
planner. I cannot offer you any
financial planning advice or wisdom.
Only the opinion, from my own experience, that you need to seriously
start looking at your retirement finances no later than your early to
mid-forties. Especially if you are
considering an “early” retirement and are carrying any debt or have
children. Please make an appointment
with your bank manager or a financial planner.
If however, you have decided that financially, you can retire, I
offer the following advice:
-
A monthly budget. If you do not know exactly how much you do
spend on a monthly basis, and more importantly, on what, get out a piece of
paper and a pencil and start documenting every dime that runs through your
fingers. That includes mortgage/rent,
cable, cell phone, house and car insurance, gas for the car, groceries,
transit, license sticker renewal, etc.
Every dime. And I do mean every
dime. All fixed and variable
expenses. And don’t forget “spending”
money. At least a year before you
actually plan to retire (two years would be even better), you need to know
where every last cent you earn is going.
And if you discover, that on a monthly basis, you are already spending
more than you earn, don’t retire. Start
watching reruns of “’Til Debt Do Us Part”.
-
Don’t forget about income tax. Take the monthly pension figure human
resources gives you and skim at least 30% off of the top for income tax. The figure you are left with is probably
closer to the actual, monthly dollar amount on which you will have to live your
retirement life. If after considering
this revised figure, you still plan to move ahead with retirement, sign all the
tax forms that will come with your final batch of paperwork so that all income
tax can be deducted at source. Then
deduct the cost of Ryerson’s medical and dental benefits. And watch that monthly “pension income” drop
even further. (There is an upside
though. Medical and dental benefit costs
are tax deductible.)
-
And I hate to report, but once retired, worrying
about money is your new extra-curricular activity. (Sorry about that!) I have come to the conclusion that like
nature, the sub-conscious abhors a vacuum.
All of the time and anxiety you used to expend fretting about your daily
commute (traffic, packed subway cars, weather, etc.) is now spent worrying
about money. No matter how large your
pension cheque, how tight and precise your monthly budget, every time a bill
shows up in the mailbox, you start to panic (again) about whether or not you
can “afford” to pay it. My most fervent
hope is that the anxiety about money lessens after about a year. Once I have “lived” through one calendar year
on my Ryerson pension, I will realize, deep down, that everything is going to
be okay!
(.... stay tuned! Even more wit and wisdom to come!)
