There's an important distinction when it comes to retirement – are you retiring from something or retiring to something? Before you decide to leave the workforce, there are serious considerations to take into account, according to Joshua Kadish, partner at RPG-Life Transition Specialists.
The fact is baby boomers are beginning to retire in droves and the trend is expected to continue. So before you decide to quit the workforce for good, there are several things you should do first:
1. Understand how much you currently spend to live. How much money do you need for your basic living expenses? From groceries to your car payment to entertainment to utilities, you need a complete review of your finances.
2. Understand what your sources of income will be. Will you have a pension, rental income, money from your RSP or TFSA? How much money will you be expecting via the government via CPP, GIS and OAS?
3. Run an analysis. Now that you know how much money you will have coming in and what it is you are spending your money on each month, run an analysis to see if you will have enough money to last you until you are 95 years old. Heck, you might decide to err on the side of caution and push that number out to 100. Kadish suggests this will be an eye opening experience.
4. Take a retirement test drive. Spend the next six months ONLY living on your retirement budget. Do not spend your paycheque. See how your lifestyle changes and whether retirement is doable.
5. Create a new social life. Most people build their lives around their careers, and when they retire, their social life disappears. This can lead to depression and isolation. You need to make sure that you have connections and activities outside of your job that will give your life meaning and purpose.
It can be shocking how few people have really thought about retirement. This is a huge life-change that requires serious thought and preparation.