Finance BLIND SPOT: WORK Assumption: Your last day on the job is the best day of your life. Reality: Maybe you won’t miss the job, but there might be other things about work that you do miss. Some people look forward to their last day of work as the best day of their life. Nothing wrong with this point of view. But it doesn’t always reflect the reality of post-work life. Once you leave your job, there’s a lot of time to fill, and a lot of “empty space” in our lives. Not realizing the importance of what work provides (as opposed to what a job provides) can be a big blind spot, particularly in the early years of retirement. Here’s the thing: for many of us, work is more than just a way to get a paycheque every two weeks. On one level, a job provides a sense of structure and purpose to our lives. It can also function as a place to socialize with colleagues and peers, and develop associations and friendships that extend far beyond the 9-5. Psychologically, work can be a place to receive recognition for our efforts and our successes, a place where we’re rewarded for our skills, our abilities and our insights. Of course, work isn’t the only place where we can find these things. And of course, most of us eventually find more than enough activity to fill the time that work once occupied − pursuing a sport or hobby, donating our time to a cause we care about, travelling, visiting with friends and family, or maybe pursuing part-time work, becoming a consultant for a couple of years or starting a business or “side hustle.” But if you’re not prepared for it, there may well be a transition period of several months or several years that leaves us feeling rudderless and without direction in the absence of the regular routine of work. BLIND SPOT: MAJOR EXPENSES Assumption: By the time you reach retirement, your expenses will go down, so you won’t need as much income or retirement savings. Reality: Probably true in mid-late retirement. But maybe not in early retirement. Typical retirement planning assumes that you won’t need as much income as you did during your working years. And that’s likely true: by the time you’re well into your golden years, the house will hopefully be paid off, the kids will have moved out (fingers crossed), and a lot of those typical expenses such as food, clothing and transportation will likely be dropping. But what about the early years of retirement? They can be a different story. During the early years, we tend to be busy and active. We’re travelling. We’re busy crossing items off of our “bucket list.” We’re taking a serious look at that cottage by the lake, that condo in the sun belt or that sports car we’ve always dreamed about. There’s nothing wrong with such spending – that’s why we scrimped and saved for all those years. And, as long as we’ve planned for that spending ahead of time, there’s no reason why it should derail a long, comfortable retirement. But when we don’t account for them in our retirement savings projections, that’s when challenges can occur. What can we do about this? One way is to set up specific savings “buckets” for big-ticket items that are separate and distinct from your general retirement fund. If you’re able to tackle some of your major foreseeable expenses – say, redoing your roof, buying a new car or purchasing that RV or vacation condo – while either you or your spouse is still working, that’s a good idea. Another option is to pursue part-time work (consulting, freelance work or a small contract) with the goal of generating enough to pay off that specific expense you’re targeting. Whatever option you choose, your goal should be to minimize the impact on your long-term retirement capital. Dipping into it to fund major expenses in early retirement could put a permanent dent in your ability to generate cash in the years to come. CSANews | SUMMER 2019 | 29
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