Retirement Planning Starts With What You Want Your Money to Pay For
Clement Chung
Before asking whether you have enough to retire, ask what retirement needs to pay for. A portfolio balance alone cannot answer that. The same amount supports very different lives depending on housing, pensions, family responsibilities and the spending you actually value. Build a retirement year in dollars Start with essential expenses. Add travel, hobbies, gifts, home maintenance and the costs that may arrive less often. Remove work expenses that genuinely end, but do not assume everything becomes cheaper. Then separate an early retirement year from a later one. A travel-heavy first decade and a period needing more support at home should not be forced into one unchanging picture. Hypothetical numbers help organise the question: if annual spending is $60,000 after tax and reliable income covers $35,000 after tax, investments need to supply the $25,000 difference. Taxes and timing still need modelling. Match income to the spending gap List employer pensions, CPP, OAS where eligible and other income. Confirm estimates and start dates rather than using maximum benefits. Next, test how withdrawals could work across registered and non-registered accounts. Include market losses early in retirement, inflation and a longer life than expected. A projection is a scenario, not a promise that returns arrive evenly. What if the first plan does not work? There are usually several variables to examine: retirement date, part-time work, spending, housing or savings. Discuss which ones you would actually be willing to change. I want the plan to explain what is comfortable, what is uncertain and what would trigger a review. A retirement number becomes useful when it connects to a life you can describe. Related reading: Can You Work Less? A Financial Planning Framework for BC Business Owners.
Before asking whether you have enough to retire, ask what retirement needs to pay for. A portfolio balance alone cannot answer that. The same amount supports very different lives depending on housing, pensions, family responsibilities and the spending you actually value. Build a retirement year in dollars Start with essential expenses. Add travel, hobbies, gifts, home maintenance and the costs that may arrive less often. Remove work expenses that genuinely end, but do not assume everything becomes cheaper. Then separate an early retirement year from a later one. A travel-heavy first decade and a period needing more support at home should not be forced into one unchanging picture. Hypothetical numbers help organise the question: if annual spending is $60,000 after tax and reliable income covers $35,000 after tax, investments need to supply the $25,000 difference. Taxes and timing still need modelling. Match income to the spending gap List employer pensions, CPP, OAS where eligible and other income. Confirm estimates and start dates rather than using maximum benefits. Next, test how withdrawals could work across registered and non-registered accounts. Include market losses early in retirement, inflation and a longer life than expected. A projection is a scenario, not a promise that returns arrive evenly. What if the first plan does not work? There are usually several variables to examine: retirement date, part-time work, spending, housing or savings. Discuss which ones you would actually be willing to change. I want the plan to explain what is comfortable, what is uncertain and what would trigger a review. A retirement number becomes useful when it connects to a life you can describe. Related reading: Can You Work Less? A Financial Planning Framework for BC Business Owners.