Saturday, November 13, 2010

Retirement planning...

How does one decide when the right time is to consider changes in your lifestyle directed towards achieving some level of relaxed independence from regular work and income? Unless you're a lottery winner or one of the lucky ones with a guaranteed income pension plan, it's not an easy thing to decide. For many Canadians the 9 to 5 job is the only way to survive while maintaining a reasonable standard of living for you and your family. But as you get closer to those "senior" years, you start to think about the tradeoffs and whether you're getting the best value for those many hours invested working to earn that paycheque.

Another important factor that will often come into this calculation is the issue of health. If, like myself, you've had a brush with a major health concern, you find that priorities begin to shift. You quickly realize that the end of the road is coming into view and you wonder whether the road you're on is the one you really want to choose. There are all those other side streets passing you by on the journey and all it takes to turn onto one of them is will power.

Well, let me tell you, change is not easy. I think most of us realize this. It's also extremely hard to imagine how it's possible to switch from a regular income lifestyle to one with little or no regular income. So how does one go about it? Well, I don't have the answer to that question yet. But I can tell you a bit about how my wife and I are going to at least attempt to get the process started.

We're thinking (or hoping?) this will be a process that unwinds over a period of two or three years. Our current situation is that we have two properties, our home and our cottage in the country. The plan is to find a way to combine the two properties into one in order to both reduce expenses and to eliminate the cost in time and effort required to maintain both properties. There are three initial steps to this starting portion of the plan:
  1. Sell the cottage in order to obtain capital for step 2.
  2. Purchase a new home that has the properties and expenses that we fell are right for us for the forseeable future.
  3. Slowly move and adjust to the new home and eventually sell our current house.
 The hope in this initial part of the plan is that we end up in a situation where we're living in a place that we're very happy with and our expenses are reduced to a reasonable level. Naturally it's also preferrable if there is some leftover capital from the sale of the two properties to add to the retirement fund. If we achieve this then the likely next steps are to reduce the workload to part-time or to switch jobs completely to something local and more appropriate to a relaxed slower pace of life.

The recent world financial situation has affected many of us by reducing the funds available for retirement. This has no doubt affected the retirement plans of thousands if not millions of people. We're hoping that a slow but well thought out transition plan will help us to achieve our retirement goals. So, barring a lucky lottery win, all this plan requires a great deal of patience and a lesser amount of will-power than what would be required for a more drastic lifestyle change. So think about where you want to be 5 to 10 years down the road and then come up with a plan to get you there. If you don't start soon you'll find that another 10 years has gone by and you're still stuck on the road you didn't want to be on.