Many of our clients have crossed the retirement threshold seamlessly, or at least that’s how it appears from the outside. On the inside, there is often some turmoil and panic about the transition to funding your new lifestyle. Usually as you launch into retirement, you might find that your spending is higher than initially anticipated. You might begin to worry about advanced health care costs, or the future may be too uncertain for you to have a good idea about what to expect. As wealth advisors, it is our job to help clients set their worries aside by helping them to focus on the elements of retirement and investment planning that we can control.

When you first enter retirement, you may find you’re spending more than you thought you would. A traditional retirement planning approach suggests an individual or couple should examine their expenses, remove any work-related expenses and use that figure as an accurate measure of what their spending will look like in retirement. While this can be a useful estimate tool, in our view it is too simple and fails to factor in the changes that retirement brings and the opportunities it presents.

Our clients often report that after transitioning into retirement, their expenses have actually increased.. Dream vacations get booked, home renovations or moves are accomplished, and existing hobbies get more of your attention. All these activities can lead to increased spending. This can come as a shock, especially if a year or two into retirement you realize your spending has eclipsed what was in your initial plan.

Normally this is short lived, and we advise our clients to expect this discrepancy. After the first few years of retirement, spending typically comes down as you cross off those bucket list items, and you fall into a more normal “schedule” of activities.

The cost of future health care is another normal retirement concern. Many people retire as a result of a parent’s health issues. When you start to see the bills roll in for their medical care and retirement home, it can bring about nervous feelings that your own costs could end up being higher than you projected. We can set some of these worries aside by examining usual retirement patterns.

Characteristically, in the years before you need advanced health care or home care services, your expenses are lower. You aren’t traveling as much or spending significantly on home improvements. This helps to adjust your annual lifestyle expenses lower than originally planned. Also, your investment portfolio may have grown due to a reduction in withdrawals. Additionally, at the time you are moving out of your home and into a care facility, you are probably selling your home and providing yourself with a cash infusion that once invested will continue to fund your increased expenses. We have seen this normal retirement cycle many times over and its results are almost always the same. In the end, you are being taken care of and the financial side of the equation balances itself out.

Finally, one of the major hesitations some have in approaching their retirement is the never-ending list of “what if” questions a transition like this brings to mind. The retirement road ahead appears daunting at the outset, this can paralyze people from taking the leap into that next stage of life.That is where we come in. The Kozak Financial Group has been helping Canadians make this transition for decades.