Are you really ready to retire?

A retired couple walking together on a brisk afternoon.

It's important to plan for the transition from employee to retiree.

If you're like most hard-working Canadians, you've probably dreamed about retirement. But are you really ready to leave behind the working world?

To be sure, there's not a whole lot to dislike about relaxing on a sandy beach, playing golf at your leisure or spending time with your family. But the reality is, there are a number of lifestyle, financial and professional issues to consider when determining the right time for you to retire. Here are some thought-starters.

Transitioning to a new life

If your identity is tied to your business card, you may have a tough time moving into retirement. Leaving behind colleagues and breaking with long-established daily routines are significant lifestyle changes that require preparation. To help ease the transition, it's important to replace your professional activities with personal interests, whether that's gardening, volunteering, taking classes or starting a small consultancy.

Adopting new roles in community, cultural, political, charitable or recreational organizations can also help you prepare for retirement and ensure that your life continues to be both fun and stimulating.

Finding your bliss

An eagerness to pursue a life-long passion is a sign you may be ready to retire. In fact, many Boomers are redefining the very notion of retirement by taking on new career directions as they approach retirement.

Perhaps you'd like to put your professional negotiating and project management skills to work for a non-profit organization or start the business you've always dreamed of. For many Canadians, self-employment can be both a lifestyle choice and a source of added income.

The move to entrepreneurship often involves a process of reinvention — turning a hobby into a paid pursuit or moving from a full-time job to the role of a consultant.

Addressing the financial considerations

Of course, the decision to retire ultimately hinges on your financial preparedness. Trends such as increased longevity and rising living costs mean that we will need to save more for a greater length of time.

Clearly defining your future goals can help ensure you have the money you need to retire comfortably. As part of this process, consider all potential sources of retirement income, including employer and government pensions, inheritances, your registered and non-registered investments and real estate. If you discover that your retirement needs exceed your expected income, there may be ways to bridge the gap, such as boosting your monthly savings contributions or, depending on your life stage, bolstering your portfolio's growth potential with a greater portion of equity funds.

The ties that bind

Even with all the necessary building blocks in place, making the transition from employee to retiree can be an emotional experience. However, by viewing retirement as an opportunity to strengthen bonds with family, reconnect with good friends and renew your interests and passions, starting this new stage in your life can be easier than you think.

What Canadians wish they had known before they retired

Canadian retirees who work with a financial advisor are more confident about retirement savings. That's one of the main findings of the recent TD Waterhouse Canadians and Retirement Report.¹

The survey found that 76% of retired Canadians (between the ages of 55 and 70) are using a financial advisor to help manage their investments. Among those who work with a financial advisor, 73% feel their retirement savings are ahead of or right where they should be, compared with their peers.

"The good news is that Canadians are not only aware of the need to plan for retirement, but they're taking the right steps to get there," says Patricia Lovett-Reid, Senior Vice-President, TD Waterhouse. "There's no such thing as a tried-and-true retirement plan that is a perfect fit for everyone. It's essential to develop and maintain a financial plan that is right for you," she notes.

Here are some other key findings from the report.

One-third of retirees are spending more than they expected, particularly on day-to-day living expenses, taxes and medical expenditures.
About 41% of retirees say that the most challenging aspect about transitioning to retired life was no longer being defined by their career. The key to overcoming this challenge was being active and involved — pursuing interests and passions, volunteering, or spending time with family, for example.
Approximately one-third of retirees are continuing to work in some form: volunteering (15%), part-time work (9%), consulting (4%) or starting a small business (3%).
Personal fulfillment and social interaction are the main reasons for continuing to work; less than half of retirees are doing it to earn extra money.

¹ TD Waterhouse, Canadians and Retirement Report, "Lessons learned: Top tips Canadian retirees wish they knew before they retired," May 31, 2011.

The information contained herein is current as of November 18, 2011.

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