North of the Border: Preparing for Retirement
by Pat Mestern
A number of people have asked how to prepare for retirement. Considering the number of people that will be over 50 years of age in the next ten years, it's a valid question. Even though you may be living on a limited income and raising children, you should also be thinking about your retirement years. There are tomes written about retirement and income needs. Most make good bedside reading. In order to approach the subject a little differently, I went looking for a few happily retired people for some good down-to-earth advice. The information they imparted is invaluable.
Even if struggling to raise a family, plan for retirement now. Remember the old Amish saying - To soon, old; Too late, smart. Retirement can be very pleasant if plans are well thought out in advance. Write down your retirement desires, needs and wants. It's not too soon. You need the written encouragement to work toward a goal.
Know where you want to live, how you want live, if and when you want to make a move and why. Never make hasty decisions about such an important issue.
If you own your home, make sure that all expensive electrical appliances i.e. stove, fridge, freezer, washer, dryer, computer are replaced before retirement. Have all major house repairs done.
Retire with no debt. Pay off all credit cards, your mortgage, your car and any other outstanding loans. Replacing your vehicle will be the biggest post-work expense. Have enough money in the bank to do this. You don't want to negotiate loans after retirement. Use credit cards or line-of-credit for major expenses such as a holiday, but only if you can pay the balance at the end of each month. Try to pay everything with cash.
Begin to track your expenses to give an accurate picture of spending habits. Lose the bad habits, expand on the good.
You can live on far less when retired. One gentleman mentioned that with no debt, he lives well on 40% of his former wage. You don't eat as much so groceries are cheaper. Clothes are not so important. Restaurant meals are a treat, not a necessity. Commuting charges are almost nil.
Restructure your lifestyle to fit your finances. Gear retirement activities to comfortable expenditure levels. Walking is far less expensive than membership in a gym.
You don't need to accumulate STUFF after retirement. You should be giving some away. Remember, looking is pleasurable; recreational shopping can lead to financial hardship.
Pursue a hobby, but only if it generates enough income to pay for supplies. Some hobbies are financial burdens. If this is the case, switch to one that is as creative yet demands a more reasonable financial outlay.
Scale festive occasions back to comfortable financial levels. Don't give gifts if you can't afford to buy them.
When you are retired, don't do without because you want to leave a financial legacy. Your children should be the first to encourage enjoyment of life in your retirement years.
If possible, ease into retirement over several years. Too quick a change is difficult for some to handle, mentally and physically.
Don't approach retirement as you did work. You don't have to follow a 9 to 5 routine. You're free from the clock. Slow down. Relax. Take time to read, to reflect, to enjoy life without hassle.
Begin now to put emphasis on the simpler things in life. Not only are they worth your full attention, they are usually less expensive to pursue.
Retirement is inevitable. Look forward to the day with all your strategies firmly in place.
Periodically Pat Mestern provides us with frugal living tips from a Canadian perspective. You'll find some of her other musings at patmestern.com.
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