Exploring your retirement: Starting the conversation
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Life goals and financial goals often go hand in hand. That’s why it’s important to have a clear idea of what you envision for your retirement, particularly as you make life-changing decisions along the way.
Here are four key areas to consider, along with a checklist of questions that can serve as initial conversation-starters or points to ask a financial advisor to ensure that your retirement plan is in line with your retirement vision.
How do you envision your lifestyle? If you expect to travel extensively or pursue costly leisure activities, your financial plan and savings strategy will need to take this into account.
Have you discussed your plans with your partner? Be sure to openly discuss your plans with your partner, particularly if you are retiring at different times. Which activities will you pursue together and which will you pursue independently?
What is your home worth? The equity you may have built in your home could represent a valuable financial resource that could be tapped into through a home equity loan or through downsizing — financial advice can help you decide if this might be appropriate for your situation.
You can get a sense of your home’s value by checking the assessed value on your property tax form, investigating selling prices for comparable homes in your area, or requesting an assessment from a realtor. However, there are no guarantees that your home will be worth the same amount at the time you might decide to sell.
What is the emotional worth of your home? Moving from your home can be emotionally difficult, especially if you’ve developed strong ties to the neighbourhood — so it’s not an option for everyone.
Do you plan to start your own business? Starting a business may generate an income stream, but you’ll probably need start-up capital. It can be well worth seeking financial guidance to help you ensure you are financially well-prepared for your new venture.
Do you plan to continue working? Maybe you want to stay in your current job beyond the traditional retirement age or work part-time — for personal fulfillment or financial reasons. The longer you work, the less money you’ll require to finance your retirement and the longer you’ll have to save.
Is your employer open to phased-in retirement? You may want to consider a partial withdrawal from the workforce, during which you continue to contribute to a workplace pension plan while receiving pension benefits.
Leaving a legacy
Is leaving a family legacy important to you? Perhaps you want to provide for children or grandchildren. Or, if you have dependants, such as minor children or disabled adults, discuss the possibility of setting up a testamentary trust in your Will.
Do you want to leave assets to charity? There are tax-effective ways to leave assets to charity, some of which can even generate tax benefits during your lifetime. You may want to begin investigating these now.
Do you have a Will? No matter what your goals, you’ll require a Will to make your wishes and instructions clear for your family. Without one, your assets could be divided according to provincial or territorial law.
The sooner you start planning for the many phases of your next stage in life, the more fulfilling it will be.
Article Disclaimer¹ "TD Waterhouse Canadians and Retirement survey, 2008."
The statements contained herein are based on material believed to be reliable, but are not guaranteed to be accurate or complete. The articles do not provide individual financial, legal, tax, insurance or investment advice and are for information purposes only. Graphs and charts, if used, are for illustrative purposes only and do not reflect future values or future performance of any investment. Particular investment strategies should be evaluated relative to each individual's objectives and risk tolerance.
Each insurance policy or contract has different provisions on coverages, benefits, exclusions and limitations. Any policy should be carefully reviewed to determine the rights and obligations of the owner and insured persons. The insurance strategy described is not appropriate for all people. Particular insurance strategies should be evaluated relative to individual objectives and in consultation with a life licensed insurance advisor.
The Toronto-Dominion Bank and its affiliates and related entities are not liable for any errors or omissions in the information or for any loss or damage suffered.
² "Participation of older workers, Statistics Canada, Aug. 2007, Vol. 8, No. 8."