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Practical Financial Solutions: Retirement Myths and Realities

Roger Higgins
By Roger Higgins
September 27th, 2015

Planning for a person’s retirement is tough enough these days.

That’s why it’s important to avoid being misled by the growing number of myths surrounding the difficult job of preparing for and living in a financially comfortable retirement.

Whether your retirement is just around the corner or way down the road, you probably think about it – the shape of it, the quality of it – and perhaps worry about it, too. That’s why you plan for retirement – to eliminate as many unknowns as possible and to chart the right retirement course for you. But every solid plan needs a solid foundation. The good news is that in this electronic age, there’s lots of information out there. The bad news is there’s also a lot of misinformation out there. So to give your plan the solid foundation it needs, let’s dispel some myths and look at some basic realities of retirement.
 
Myth:  Financial health is most important

 
Reality:  Sure, having money definitely provides additional choices in retirement but the reality is that people tend to ‘right-size’ their retirement lifestyle in line with their financial resources.
 
As well, many people enjoy fulfilling and meaningful retirements without having lots of money – by volunteering, through part-time work, or other appropriate lifestyle choices.
 
The biggest issue is your health – poor physical or mental health removes choices whether you have money or not. So your plan should include maintaining and improving your health and knowing how health issues will be handled before they happen.
 
Myth:  The biggest risk to your retirement income is the stock market

 
Reality:  Yes, poor investment returns early in retirement can have an impact, but avoiding the stock market by sheltering your investments in low-return vehicles such as Guaranteed Investment Certificates (GICs) may not be the answer. Unlike GICs, equity investments can provide the opportunity for the level of growth over the long term that can offset the effects of inflation. So, your plan should include strategies for accessing market growth while still protecting your income from the impact of a short term market turndown.
 
Myth:  You’ll have plenty of spare time.

 
Reality:  Experienced retirees will tell you that they have little spare time. Life tends to expand to fill up time so your plan should ensure your time fills up with things that are meaningful to you.
 
Myth:  People work in retirement because of financial need.

 
Reality:  Some people do work in retirement for financial reasons but many seek part-time, occasional or flexible work that provides social interaction, allows them to feel challenged, or provides a sense of accomplishment. So plan to talk to ‘working retirees’ about why they work and how they fit their retirement around it.
 
To eliminate all the retirement myths from your retirement realities, talk to your professional advisor about the best retirement plan for you.

This column is sponsored by Roger Higgins, a BA, CFP Division Director for Investors Group in the Kootenays. For all your financial planning needs, contact Roger at 250-352-7777 of email at roger.higgins@investorsgroup.com

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