5 Things You Don’t Know About Retirement

Jan 19, 2015

“Retirement” means something different to almost everyone you ask. But almost everyone universally focuses on the financial issues surrounding retirement, and very little time on the emotional changes we face during that time of our lives. But what is retirement, really? That depends on who asks, but what we know is that it isn’t the retirement plan of your parents or grandparents. Nope, not anymore.

The financial concerns are certainly important. Like do I have enough money to stop working? Will it last long enough and will I be clipping coupons to eat? However, recent studies support that our general unpreparedness for retirement extends far beyond financial readiness. The Huffington Post recently scoured this data to condense the 5 common themes of what we don’t know about retirement. We thought we would share them in this week’s blog, edited with some helpful links to other articles.

Keeping busy is harder than you’d expect
Once your days are freed up from the grind of the nine-to-five, it can be more difficult than you imagine to find fulfilling — and more importantly, affordable — activities to keep you active and motivated. Your challenge is to find a balance between activity and downtime. And you’ll have to do it frugally; recreational activities and new hobbies can be expensive and that could quickly drain your hard-earned savings.

You have to expect the unexpected
You’ve been an adult long enough to realize that the only constant in life is change, and this will prove true in retirement more than ever. For instance, the Globe and Mail points out that even empty nesters can be faced with the reality of an adult child returning home or an elderly parent becoming a dependent. What’s more, divorce rates among retiree-aged Canadians is on the rise, so your retirement bliss could be much different than you imagined. It’s important to have a financial cushion for these kinds of changes so you’re able to roll with the punches and still enjoy your retirement.

You’re doing better than you thought
Sure, you’re not the spitting image of the guy on the sailboat in the Freedom 55 commercial, but chances are you’re probably just as well off as your neighbor — or you might be doing even better. According to Money Sense, the average retirement age isn’t mid-50s like the media would like us to think it is: in Canada, the average age is 62 for men and 61 for women. What’s more, despite pension reform being a hot topic in the media, they’re quick to point out that the Canadian Pension Plan (CPP) is actually very stable and will provide retirees with a consistent annual sum of money in your golden years. Even without government funds, Canadian Business points out that most retired couples can live comfortably on 50 to 60 per cent of what they earned when working — less than the 70 per cent that’s often thought to be the golden number.

You have more time than you think
Although retirement is sometimes seen as the dwindling twilight period of life, in fact it’s really just another stage of life that will last longer than you anticipate. With the life expectancy steadily climbing each year — 65-year-old men can expect to live until 83 and women until 86, according to Money Sense — it’s likely that you’ll have close to a couple of decades to enjoy this phase of your life. Of course, that means you should be saving more than you think you’ll need and you should bear in mind that with increased age comes an increase in health costs as employer-paid medical benefits cease.

You have options 
The cessation of a regular pay-cheque can be a scary thing, but don’t panic. If you feel like you’re not financially ready for retirement, there are plenty of options. The job landscape for retirees is constantly changing, and the “hard stop” mentality of retirement is shifting. Nowadays, it’s not unusual for a retiree to find a whole new career after retirement, or to negotiate different employment options such as doing part-time contract work for their former employer. If staying in the workforce doesn’t appeal to you, there are other ways to pad your retirement fund, including downsizing your home.

That’s retirement today and probably a whole lot of other things we haven’t discovered yet.

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