D. Smith: How to view retirement

We should start preparing for retirement five years before it happens

Baby boomers are changing the way society views traditional retirement. We are a large number of people heading into our senior golden years.

There are many different ways to view retirement. Some people embrace retirement and look forward to slowing down and enjoying not having the work commitment on a day to day basis. Other people miss the daily commitment of a job and the social involvement of being around other people.

We will all face retirement someday. Retirement can be a planned event many years in advance or it can be a retirement forced on us due to lay off from our job or ill health. We should start preparing for retirement five years before it happens. It is a good idea to try living on a reduced income so you can financially anticipate the changes.

In retirement, we may have a reduced income in retirement compared to our earning during our working years.

An emergency fund is a financial security blanket. It helps us to handle unforeseen circumstances. Many types of expenses can arise unexpectedly, a car repair, a leaking hot water tank or a death of a family member or close friend can mean extra unexpected costs.

A budget may not seem like much fun to plan for but a budget can reduce stress because we know where we are financially. Living within our financial means can be a kind and gentle way to live compared to overspending and not knowing if we can meet our financial obligations.

If you have any debt in retirement, review what you are paying in interest rate costs. Eliminate high interest rate debt and that includes department store credit card debt, that can be 18 or 28 per cent. High interest debt means less money is available for retirement spending.

Take care of your health. Your bank account pays for unhealthy habits. Every dollar spent on medical expenses is a dollar not available for spending on other enjoyable things in retirement.

During the working years, we rush through many of our activities. We can learn to slow down in retirement and focus on enjoying some of our daily activities. We can get more serious about cooking. We can spend more time on hobbies and perhaps a seldom done hobby can become something we look forward to on a daily or weekly basis.

Review your housing costs to find out if it makes sense to keep your current house. Many people sell a large family home to downsize in retirement to free up available cash. The extra cash can be used for travel or to free up cash when living on a reduced retirement income.

Many home owners want to reduce their time, energy and costs associated with keeping a larger home. Moving into a condo or townhouse can allow you to travel more. Don’t make yourself financially blue by living in a house you can no longer afford.

Stepping out of the workforce which has consumed many of our hours per week for decades may leave us wondering how we will fill those hours every week. We may fear not having enough to do. When people are active during their working years, they make an easier transition to being active in retirement. We often hear retired people say “I don’t know how I found the time to work.”

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