Whether you’re married or in a serious relationship, it’s important that you’re both on the same page as you decide how you’ll finance your retirement.
Working closely with your partner can help you get ready for major life events – like weddings and vacations. It can also help you prepare for emergencies, like fixing a leaky roof or traveling to visit a sick family member. If you’re both on the same page, you and your partner can proactively manage these financial issues when you’ve reached your golden years.
You can ask yourselves these simple questions to help start the conversation and begin building a retirement plan that meets both your needs.
When do you want to retire?
You and your partner will need to figure out when to retire. Without knowing that, it could be difficult to know how much income you’ll need after you stop working.
Retirement looks different than it did even just a generation ago. As people live longer, generally healthier lives, some choose to work longer and retire later. Or some may retire but not completely stop working.
How much money will you need?
Figure out how much money you’ll need to have the retirement you both want. Will the 2 of you be happy if you have less income than you do now? If that sounds like it could affect your big plans, such as traveling or buying a cottage, then you may need to figure out how you can get more income.
Your lifestyle decisions will affect how long your retirement savings will last.
What do you really want to do after retiring?
What do each of you really want to do? If your partner is excited about seeing the world but you’re more interested in trips closer to home, then you need to have a chat about those plans.
If “traditional” retirement isn’t for you, now could be the time to reinvent yourself as a globe-trotter, a volunteer, a hobbyist, a team captain, or chef extraordinaire. With a little inspiration, some planning and the right financial advice and preparation, retirement just might be your most exciting time yet.
Do you want to work in retirement?
Retiring doesn’t have to mean you’ve left work behind. You and your partner may have personal passion projects – such as writing a novel or starting a business – that could help create income in retirement. If that’s the case, then it’s worth talking about your plans with your partner.
What are your guaranteed income sources?
You should have at least a couple of guaranteed sources of retirement income, though this depends on where you live and your work before retiring. Most Canadians have access to funding through Old Age Security and the Canada Pension Plan (or, in Quebec, the Quebec Pension Plan). You may also get income through a workplace pension, or maybe you’ve invested in an income annuity or registered retirement savings plan (RRSP)?
Consider your health and wellness
Your health matters. It’s not always easy, but it’s a good idea to talk about your health and the health of family members that may affect your lifestyle or financial situation in retirement. A change would mean spending more time at home or maybe spending more time in a warmer climate to improve your health and wellness – you’ll have to financially prepare to make those plans happen.
If you’re retiring and losing coverage through your workplace benefits, you may wish to consider personal health and dental insurance coverage to help pay for things like:
- Prescription drugs
- Massage therapists, physiotherapists, podiatrists, chiropractors, etc. (no referral needed to access)
- Routine dental care, including cleanings, fillings and dentures
- Wheelchairs, CPAP machines, orthotics
- Glasses, contact lenses, eye exams
- Hearing aids
- Out-of-country emergency medical care
The alternative is to pay for all those expenses out-of-pocket.
Keep your money growing
A lot of couples getting ready to retire focus on the question “Will we have enough to last throughout our retirement?” It’s also important to consider how you can save more money each month, and take the money you already have and make it grow, so you can continue to do the things you enjoy.
For Canadians who feel passionate about seeing their savings grow in retirement, there are options. For example, you could look at investing in a segregated fund policy that offers guaranteed protection as well as the potential for investment growth. Or you could put your money in a retirement program that combines segregated funds with income annuities, which can provide you with a regular source of money in retirement.
Estate planning
As you get close to retirement, it’s a good time for you and your partner to look at estate planning. Think about who should get your financial and non-financial assets once you and your partner die. If you haven’t looked at this recently, then it may be a good time to go back to them to make sure they meet your needs.
Estate planning is also a great time to determine if your need for life insurance has changed.
Using a calculator to help plan your retirement as a couple
Once you’ve thought through the what, when and how of your retirement, you can begin to put numbers to an actual retirement budget. Estimate as closely as possible your retirement income, and your weekly/monthly expenses, taking inflation into account.