3 Financial Mistakes As You Transition Into Retirement

Retirement Income Planning, Calgary

The grasshopper watches the ant working diligently all summer long, making a home and gathering food for the winter. Thinking the ant a fool, the grasshopper spends his summer days playing in the sun and consuming whatever food comes his way. When winter arrives, the ant is cozy and well-stocked in the shelter she has constructed while the ill-prepared grasshopper staves in the cold. (Aesop's fable of the Ant and the Grasshopper)

 

The words of my mother still play like a broken record in my mind, "Save For A Rainy Day". We can't predict the future and we don't know what it may hold, but we can plan and prepare for it. Here are a few things to consider:

 

1. Not starting early in life with a financial plan - It’s true: we will spend more time planning our summer vacation than we do planning our financial future. David Chilton’s book, "The Wealthy Barber” is a great book to get you started on the right path. Insurance, investments, wills, TFSA’s, RRSP’s are simply the vehicles you can use to get you where you want to be. If you have an idea (dream) of where you'd like to be at age 60 or 65, then put an action plan in place now that will help you get there. Today is the best day to start planning for your retirement. Avoid making financial decisions until you have a proper comprehensive plan in place. Some of the choices that you will have to make in retirement are irreversible.

 

Have you considered the impact on your cash flow if you delayed CPP and OAS to age 70?

What impact will RRIF minimums have on your government benefits? 

 

2. Unplanned spending - Do you really know how much you spend each month? Or, Where you are spending it? If you’re not paying your credit card balance in full at the end of each month chances are you have unplanned spending and need a better budget. According to creditcards.com, 52% of Canadian households carry a credit card balance from month to month. Failure to plan is a plan - it's a plan to fail! Creating a budget at any age is helpful to keep you on track and keep you from being anxious about your money.

 

Does it make sense to tie up so much of your money in your home? Should you tap into that equity?

Would it be better to downsize or maybe even rent? 


3. Misunderstanding and mismanaging risks - Imagine the financial consequences of your house burning flat to the ground and not having any insurance to replace it. Not only would you have to continue paying the mortgage, but you would also have to come up with the money to rebuild. You just wouldn’t do this. There are risks associated with living and you need to understand and manage them well or live with the consequences. There's stock market risk, inflation, premature death of a spouse, longevity, long-term care, disability, traveling outside of Canada.

 

Maybe you and your spouse have adequate income now, but what will that look like if one of you passes away earlier than expected? You will see a total loss of OAS and a reduction in CPP benefits. How much less income will the surviving spouse have? And, will it be enough?

 

Are your investments doing better than the expected inflation rate, which is currently in the 4% range? Are you a GIC refugee? Are you overweight in bonds? If so, why?

 

There's no such thing as a risk-free life. The key is to acknowledge the risks and plan for ways to mitigate them. Retirees often get sucked into buying GICs at ridiculously low rates based on the notion that they are safe, but yet not getting enough return on your investments will cause you the unpleasant risk of running out of money later in life. This is an example of the need to properly analyze risk and plan properly. One way to create more certainty and cash flow are by avoiding costly mistakes. But if you do not know what to do then get some help with your planning. 

 

Learn more about our planning process to help you get your total financial house in order and keep it that way for life. We can ensure you have enough money to fund your current lifestyle, a plan in place that will ensure you reach your future goals, and the confidence to handle whatever comes your way.

Retirement Income, Investments & Tax Planning,

Willis J Langford BA, MA, CFP

Nancy R Langford CRS

 

 


Share This Post:

Related Posts

Latest Testimonial

My wife and I realized a long time ago the value of a financial planner over just a bank representative. We just felt like a number to the banks as every year it seemed we saw a different adviser with a different view. But finding a trusted, knowledgeable and personable financial planner took a lot of time and effort. It just seemed, so many large corporate Financial Planners were more concerned about what they could make off of us rather than what they could make for us.
What we wanted, was not just reasonable returns now, but good personal advice in our preparation for retirement and what happens when retirement actually arrives. We wanted someone who would be walking with us, guiding us on our way to retirement.
From the first time, we found the web site for Langford Financial Inc, we could see the knowledge of Willis and Nancy and a real effort to educate and pass on their knowledge through seminars, workshops and their personal service. Once I reached out through their web site for more information, Willis was quick to respond, offering and giving whatever information I was looking for and never was there pressure to commit to anything.
The feeling of comfort and ease when talking with Willis was inviting enough for us to want to meet with Willis and Nancy, just to see firsthand if there was a connection and what working with them would look like.
And when we did meet for the first time, that feeling of comfort and ease was very evident. It was a unique experience for us to be able to sit down and get to know a financial planner (or a team of both Willis and Nancy) and not have any sales pressure on us. Just getting to know Willis and Nancy was important for us. We needed to be comfortable with them and see their competence in the business, and it was obvious that Willis and Nancy wanted to know us better so they could know how best to help us.
Once we decided to move our accounts over to Langford Financial, we found their process was comforting and refreshing as Willis and Nancy first worked at evaluating our complete situation. They dug down to get a complete picture of where we were at, where we wanted to be and how to get there. This took some reflection on our part but once we saw how they put it all together in our “Financial House In Order” binder, we were confident we made the right decision to go with Langford Financial.
Since the time we started working with Willis and Nancy I have attended many of their seminars and can say the information they have been teaching has been amazing. Always relevant, and consistent with their desire to help those coming up to retirement, and covering so many different situations as everyone has a different life situation. I know more than one of the tax-saving strategies they taught at their seminars will work for my wife and I, so we are very happy about that.
We would definitely recommend Langford Financial, not just for all your retirement planning needs, but they have great ideas on savings for your grandchildren too!
Paul and Elaine Radder

Paul & Elaine Radder
Long-term Clients

Contact Us

Questions? Comments? Call us today at 587-755-0159 or fill out the form below:

Have Questions? Call Us Today At

Call Us

Join Our Newsletter



Subscribe