Retirement Strategies for Your Unique Values

by | Jul 20, 2021

Planning your retirement is a waste of time and money if you don’t start with your values. Full stop.

Oh, you might put together a strategy that squeezes every last dollar out of Old Age Security or perfectly calculates when to convert your RRSP to a RRIF and even feel good about it for a minute…but unless your only measure of success is how correct you are, you aren’t going to feel great about your retirement strategy for very long.

As we wrote at the very beginning of this series of posts about your values and your financial plan:

We have learned that there is no one set of values that fits everyone. Even where people share values, how each of us approaches and lives those values is unique to each one of us. We have also learned that, without connection to our specific set of personal values, our goals fall flat, our achievements feel unimportant, and we lose motivation.

With each successive article in this series we’ve been flipping between reflecting on a specific value (like safety & security, family, and most recently, freedom) and how you can weave it into your financial decisions, and then leading with a particular financial planning tool (like cash flow, education strategies, and now retirement strategies) and how they can be tailored around your own unique set of values.

By the end of this year, we want you to be thoroughly familiar with what success looks and feels like for you, so that we can help you move towards it…whatever “it” looks like. That’s one of our own core values, after all.

We’ve found over our decades in this profession that prospective clients often show up with “how” questions, like:

  • How should I draw down my assets in retirement?
  • How should my portfolio be managed?
  • How much can I spend?

They’ve been trained (by every bank ad ever) to believe that answering the “how” questions are what retirement planning is all about, and since it’s likely the first and only time they’re going to retire, they’re understandably nervous about getting the details wrong.

The problem with starting with the details of “how” is very similar to the problems you’d encounter if you started to build a house without stopping to design it first. Even if you somehow manage to get the foundation poured properly and the walls and roof attached to each other, starting with design first is the only way you’ll end up with a home worth living in.

Think for a minute about your own financial situation: you may have the exact same income as someone else. Your portfolios may be eerily similar, and you may have retired on the same day and have the same cost of living. Spooky. Your retirement strategy can’t be that different from theirs, can it?

If you’re only comparing your net worth and cash flow statements, you might be tempted to say “no”. But what about your values?

What if you have a passel of kids and grandkids, strong values around education, and a family cottage that you inherited from your parents and want to pass down as seamlessly as possible to the next generation? What if your doppelganger has a second home but no kids and no other close family, suffers from anxiety, and had parents and grandparents who all lived into their very late 90s?

Your retirement strategy might include:

  • Facilitated family meetings to help you understand what the next generation wants (you might be surprised!)
  • Planned gifts to each child’s RESP and 529 plan in the U.S. (making sure to stay within the annual gift tax exclusion limits on the U.S. side).Setting your portfolio up for growth since it will definitely outlive you.
  • Money set aside in your Will for a trust that will cover annual cottage expenses even after you’re gone.
  • Even more facilitated family meetings so that everyone is clear about your intentions and hurt feelings can be addressed with care or avoided altogether.
  • Overfunded permanent life insurance policies so that your final tax bill is covered.

Your double’s retirement strategy should look completely different, even if both of you spend the same amount every year and have identical portfolios down to the penny. Their strategy might include:

  • A large enough cash wedge to cover two years of spending, and enough money in fixed income to ride out five full years of horrible equity returns.
    Canada Pension Plan benefits deferred all the way to age 70, with strategic RRSP withdrawals in the years before CPP begins.
  • An annuity that (along with their CPP benefit) creates enough guaranteed income after age 70 to cover their core lifestyle expenses even if they lost every cent in the market (an unlikely scenario that nevertheless wakes them up at 3AM most mornings).
  • A professional trustee named as their substitute decision maker and executor.

Applying your strategies to their life and vice versa might not be disastrous for either of you..but it would almost certainly feel that way!

It’s easy to dismiss feelings (or, as we on the Spring team call them: fEeLiNgS) as irrelevant to the dollars and cents of financial planning, but paying attention to them is the key to making sure your retirement strategies are congruent with—and ultimately supportive of—your values, and your life, well-spent.

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