Questions to Ask About Your Retirement Plan

Have you given much thought to what you want to do with your retirement? Whatever you're imagining, I bet it doesn't include filing for bankruptcy or a significant drop in your living standards. Yet that's the reality facing many Canadians as they enter retirement today.

So what could we be doing to better plan for retirement? For one thing, says the Financial Planning Standards Council (FPSC), we could focus less on RRSPs and more on a holistic approach to financial planning.

"Less than one in five Canadians are engaging in formal financial planning," says Tamara Smith, Vice President of Marketing and Consumer Affairs for the FPSC.

It's All About Balance

And that's unfortunate, because a good financial plan should help you met your retirement goals while recognizing that you have other financial commitments to meet right now.

Says Smith, "You really want to balance the needs and wants you have today with that idea of retirement planning in the future," she says. "Retirement planning really hasn't been so successful, and part of that is it's an abstract time in the future, and many of us think, 'Today, I really want this.' It's about common sense and balancing."Smith continues, "Some of the first questions I would suggest people look at are, 'What do you want to accomplish in your life? When do you want to retire? And what lifestyle do you want in retirement?'"

Of course, the FPSC recommends that you work with a Certified Financial Planner on your financial plan. "They're going to ask you the right questions [about your plan], because we don't know what we don't know," says Smith. And don't worry that you don't have enough money to work with a professional. "When you look at someone who's going to help you with your entire financial plan, they're not so focused on what your net assets are today as they are in the future."

Ask Yourself These 10 Questions

Smith adds that whether you work with a Certified Financial Planner or not, you are the person in charge of your financial plan and how you choose to meet your retirement goals. To get you started, the FPSC suggests asking yourself these 10 questions:

1. Do I have a comprehensive financial plan that addresses my goals and needs, including retirement?
2. How can I balance saving for retirement without sacrificing today's priorities and goals?
3. When do I plan to retire, and what will that lifestyle look like?
4. Where will I live? Will I make changes in my primary residence? What about vacation properties?
5. What are my expected sources of income in retirement (pensions, savings, inheritances, other sources)?
6. What do I want to leave to my loved ones or favourite charities?
7. How will I handle unforeseen health risks or other scenarios?
8. How do I take advantage of government tax breaks and ensure my hard-earned savings don't get eaten up by too much tax?
9. Should I invest in RRSPs, TFSAs, and/or non-registered investments? What should the proportions be, and what kinds of investments in each category? How does my investment strategy fit with my overall plan?
10. Do I have the right financial planning professional to help me with my financial planning? What questions should I be asking him or her?

More on this topic:
More Retirees Destined for the Poor House
Cause and Effect: Seniors in Bankruptcy, Part 2