Travelling the world, spending time with grandchildren, or devoting your energy to charitable pursuits—what does your retirement look like? You might have big dreams for how you want to spend your days once you’re no longer working, but do you have a plan?

While retirement used to be considered a brief period in later life, today we’re living longer and we’re generally in better health. That’s why it’s a good idea to prepare for this exciting time by prioritizing your well-being and your wealth with these three tips.

1. Take care of your health—make physical and mental fitness a priority

Often, when we think about retirement, we focus on being financially prepared. Finances are important, but you should aim for a more holistic view. How will you stay happy and engaged?

“Make a strategy. Choose a path that works for you and follow it,” advises Dr. David Brown, Corporate Medical Director, Global Retirement Team, CIBC. If your goal is to be active in retirement, you might start by focusing on your physical fitness. “There’s evidence that people who are active have better cognitive health as they age,” he notes. Physical fitness can look different for everybody. “Choose something that’s good for you, and all the other pieces will fall into place,” Dr. Brown suggests.

Don’t neglect mental preparation. What will your days look like without your career? “Visualize your retirement, how do you want to spend your time?” says Dr. Brown. If you have a spouse or partner, talk to them about what interests and activities you both want to pursue. Start thinking about this a few years before you’re ready to retire, so that you have a clearer picture of what your life will look like without the structure of work.

2. Pay off high-interest debt while you’re working, and focus on your savings goals

Carrying debt into retirement reduces the amount of money you have available to spend. But when it comes to deciding between paying off debt, or contributing to your RRSP, which option makes most sense?

“The decision to pay down debt, at the expense of retirement savings, is often an emotional one that isn’t driven by the numbers. Neglecting your long-term savings in favour of debt repayment may result in sacrificing the quality of your retirement,” says Jamie Golombek, Managing Director, Tax and Estate Planning, CIBC Private Wealth Management.

While you may want to pay off all your debt before entering retirement, it’s a good idea to focus on high-interest debt first, such as credit cards and personal loans. Golombek notes that if the interest rate on your debt is low, such as a mortgage, rushing to pay it off may actually negatively impact your retirement savings. “Can you get a higher rate of return on your investments than the interest rate on your debt, given a level of risk at which you’re comfortable? If so, then investing is the better bet; otherwise, paying down debt is the better choice.”

We can help keep you on track and decide where you may want to focus your energy and money.

3. Make estate planning a priority now

Your estate covers your investments, real estate, savings, and other personal effects, and you should have a plan that will cover how these things will be passed on in the event of your death. “A more comprehensive estate plan, however, should include not only plans for the needs of your surviving beneficiaries in the case of death, but also plans for management of your finances if you become unable to manage them by yourself,” says Golombek.

The cornerstone of any good estate plan is a will. You may also want to include provisions for what happens if you become incapacitated. “Creating a POA is the best way to formally document how you would like someone to manage your financial affairs if you aren’t able to do so personally,” advises Golombek. Finally, consider any charitable causes that are important to you, and if you’d like to leave any assets to charity.

The single largest mistake in estate planning is failing to implement plans early enough. Whatever your goals are for your estate, start planning early, and update your plan regularly.

Retirement can be an exciting time, with lots to look forward to. It’s never too early or too late to start planning for this time in your life. Talk to us about how we can help you achieve a comfortable and enjoyable retirement.

 

Clients are advised to seek advice regarding their particular circumstances from their personal tax and legal advisors.