Director, Financial Planning
Making the psychological shift from saver to spender can be surprisingly difficult for many new retirees. We often meet with clients who are hesitant to draw down their investments and who feel overwhelmed by all the choices they need to make to live off their savings in retirement. We came across this insightful article from CNN that discusses why it can feel uncomfortable to spend your retirement savings and how you can make it easier on yourself.
Here are a few of their top tips:
Change your mindset. Spend time thinking about what you really want to accomplish in retirement and view your savings as the means to that end. Consider the idea that your money is now doing the work, so you don’t have to.
Be prepared. In the years leading up to retirement, make sure you understand your assets, pensions and spending habits. Assess how your expenses might change in retirement and estimate how much guaranteed income you’ll receive from CPP, OAS and/or private pensions. The difference between your expected spending and your guaranteed income is the amount you will need to draw from your savings. Consider building a cash bucket to cover at least a year’s worth of those withdrawals, so you won’t be forced to sell investments in a down market.
Go easy on yourself. View your first year in retirement as a learning experience when it comes to spending.
Consult with a professional. Many investment professionals can help you save for retirement. At Money Coaches Canada, we can also help you refine your retirement goals and optimize your assets and income to help you reach them.