The art of retirement planning

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Retirement planning is part science, but also part art. It’s like a jigsaw puzzle that yields a beautiful picture when you’re done.

But to get there, you have to work on one section of the puzzle at a time.

Here’s my advice on how to put it all together – so that your retirement picture becomes a reality.

The best advice I can provide to you today is to think of your retirement years in terms of three- to five-year increments. You see, with today’s longer life spans, your retirement could last 20 to 30 years. Planning for this length of time is very difficult for most people.

The five stages of retirement We also recognize that most people will evolve through five different stages of retirement: 1) the pre-retirement years; 2) the first two years of retirement; 3) the healthy years; 4) the illness years; and 5) the alone years.

Everyone in retirement will go through these five stages. Some of these stages may last for only a few days, or they may last for many, many years.

So as you live out the “art” of your retirement years, think in terms of which of the five stages you are in today and what the next stage is likely to bring.

With this in mind, then think about the next three to five years and how you can gain as much living from these years as you can.

In the newly revised 2014 edition of my book Master Your Retirement, I provide two other ideas to help with this process:

1. The jar of possibilities
The jar of possibilities is a self-imposed game that challenges you and your spouse or other family members to try something new, to learn something new, or to go outside of his or her comfort zone.

Several years ago there was a study of people who lived well into their 90s, asking them this simple question: “If you had to live your life over again, what would you do differently?” The most common answer: I’d take more risks. This is interesting. My interpretation of this, particularly as a financial advisor, is that it rarely pays off to be frivolous or speculative with your money. Instead, I interpret this as people saying that they would put themselves out there a little more and try new things more often.

In research my book, I found that the number of people who continue to work past age 65, primarily for personal challenge and enjoyment, has continued to grow. This is the process of building a beautiful montage of images, memories, and experiences that make up your retirement years.

2. The lifeline process
The lifeline is another process I introduce in the book. This is the process of creating a clear picture of what your ideal life would look like for each three- to five-year increment. I encourage people to break down their week and their year into areas such as health, exercise, travel, family, work/volunteer/community involvement and activities.

Remember, when you break down a large problem or project into smaller pieces, just as we havedone with the lifeline process, the goals tend to be just that much more attainable. The goals are also often attained over shorter period of time.

So you see, mastering your retirement is both an art and a science. Spend some time reflecting on each aspect, and you will find that it is very possible to build a beautiful montage of your life, assembled one piece at a time, while enjoying a safe, secure, tax-efficient income with a low-cost and low-risk portfolio.

Courtesy of Fundata Canada Inc. © 2014. Doug Nelson, B.Comm., CFP, CLU, CIM, is President of Winnipeg-based Nelson Financial Consultants.