A majority of North American boomers realize they will need a part-time job after they retire.  However, many are also pegging their hopes on an inheritance or a lottery win to fund their golden years. 

Given the amount that the Canada Pension Plan or Quebec Pension Plan or Social Security (US) pays out, boomers should not rely of them as a primary source of income to fund their retirement.  Rather, they should consider them to be a supplementary component of their overall retirement income.  While a part-time job may be necessary, some boomers are seriously considering the sale of a home or property as a way to fund retirement.  In a recent survey conducted by a major Canadian bank, 49% say they are counting on an inheritance and 34% report they are hoping to win the lottery – with 14% saying they are ‘relying heavily’ on a lottery win.  For those hoping to win the lottery to fund their retirement, the odds of winning are reported at approximately one in 14 million.

Action Planning:

Here are several action steps to take in preparation of retirement:

Step 1:  Determine your government pensions payable when you retire.  For Canadians, determine your estimated CPP/QPP, Old Age Security and GIS (Guaranteed Income Supplement).  For Americans, your Social Security and SSI (Supplemental Security Income). 

Step 2:  Review your company pension plan and benefits.  At the same time, ask about the continuance of your company life insurance, medical, health and dental benefits when you retire.  If you worked in another country, (i.e United Kingdom), check with that country’s pension authorities to determine your eligibility for a government pension.

Step 3:  Determine what you have in savings, RRSP’s and Locked-in Retirement Accounts.  List all income from non-registered investments as well.  Be sure to look at: interest from personal savings, interest, dividends and/or redemptions from GIC’s, mutual funds, stocks and bonds.  Don’t forget the conversion of home equity and income from business assets. 

Step 4:  Sit down and create a budget based on your retirement vision.  Ask yourself if your budget is realistic and not exceeding, or limiting, your spending abilities.  Review it regularly and make any necessary changes that will assist you in reaching your financial goals.

Step 5:  Regularly review your budget, net worth, financial plan and overall financial goals.  Take all necessary steps to consolidate any outstanding debt and initiate actions to reduce or eliminate your debt, including outstanding mortgages.

Step 6: If you do not have a financial advisor, find one.  Seek recommendations from friends, your banker, accountant, insurance agent and other people you trust and respect.  Be sure to check the credentials and references of possible financial advisors.  Ask yourself: “Am I comfortable with this person and can I trust him/her with my money?”

Step 7:  Book and attend an appointment to review your govenment, company and pension benefits, as well as CPP/QPP, Old Age Security, Social Security/SSI, budget, net worth and financial plans with your financial advisor.

Step 8: Explore whether converting part of your home equity into tax free money is a viable option. 

Step 9:  Set aside ‘fun money’.  This is money you and your partner can use for special lunches, headline concerts, or a surprise trip. 

Step 10:  List your skills, interests and education which you can draw upon when considering part-time work.  Update your resume and tell friends and associates you are willing and available to work when retired.  As a second option, you may be interested in starting your own business in any one discipline such as: consulting, home decorating, small engine repair, tax form completion, senior care, dog walking, tutoring, garage sale convener, wedding or event planner. 

When it comes to investments, no one has all the answers.  You cannot predict beyond an educated guess what the financial market will do.  However, between you, your spouse or partner and your financial advisor, you increase the odds of making good financial decisions.  Three heads are better than one!