More to Retirement Planning than money

I contemplated in this Fall Newsletter of writing about an update on Recent Market Developments. However, my clients have been receiving ongoing updates, and frankly, anything I write today (mid October) will have changed by the time this is mailed. So, I came across this article that helps us focus on some of the really important issues in life. Below is a reprint from the National Post, Saturday May 24, 2008.

A life worth retiring for; post-work planning should be about more than just money

Most people look forward to getting out on the golf course when they finally stop working But chances are that is not what motivated Annika Sorenstam's decision to retire at the end of this season at age 37.

Traditionally, retirement planning has always been about money, how much will I need to enjoy the good life after work? Given that she has won 72 LPGA events in her career, money is probably not Ms. Sorenstam's main concern.

Rather, she may be thinking about what she will be doing with all her time off the golf course.

Retirement planning appears to have turned a corner. Now questions about lifestyle are becoming just as important as those about finances.

With the demise of mandatory retirement, fewer corporate pension plans and longer life expectancies, the traditional approach to retirement planning puts the cart before the horse, says Tina Di Vito, director of retirement solutions, BMO retirement market group.

Earlier this year, BMO released a guidebook called Define Your Path, a document meant to help Baby Boomers see retirement planning in a new light. The book asks such questions as: With whom will I spend my time? What do I value most? What will I do with my leisure time? How will I manage my health and wellness and that of my family?

"[Boomers have] an expectation that life in retirement is going to be fulfilling and dynamic. But when we ask them to explain that retirement period, they really haven't considered in a lot of detail how they're going to be spending their time," says Ms. Di Vito. A "Retirement Readiness" survey conducted by Investors Group in 2006 showed that a majority of Canadians are not properly prepared for the transition to not working Only 20% of working Canadians aged 45 years and older have a strong commitment to activities outside of work, according to the survey. Some 30% are not involved in activities outside work that give them an opportunity to make new friendships. And, 35% spend less than three hours a week immersed in activities outside of work or passive entertainment such as reading or watching TV.

"It does seem to be the case that a lot of people approaching retirement tend to worry more about the money side, and as a financial planner I think that's good. But I think that some people have drifted into retirement without also thinking about what they are going to do," says Debbie Ammeter, vice-president, advanced financial Investors Group. "You have to be ready for that really big life transition."

A retirement lifestyle plan is critical for a person's emotional and psychological well-being, says Sara Yogev, a Chicago psychologist and author of For Better or For Worse...But Not For Lunch: Making Marriage Work in Retirement.

The transition from work to retirement can be fraught with anxiety, even depression, says Ms. Yogev Retirees typically go through what she calls a "honeymoon phase," where they enjoy the feeling of being able to do whatever they want, whenever they want. "It's such a sense of freedom and exhilaration," says Ms. Yogev.

But that phase can quickly give way to a period of uncertainty. Having a clear lifestyle plan well before leaving work will help new retirees avoid that uncertainty.

"People don't realize that retirement can be about one-fourth of their life, and you cannot spend one- fourth of your life in an extended vacation," says Ms. Yogev. "You really need to face the question of "What is it that I want to do with my life?"

For your booklet version of "Define your Path" to help you see retirement planning in a new light, please contact me directly at 604.535.4306.