Introduction – Retirement is a Five-Stage Process

I wrote this book for one simple reason: to help Canadians retire smarter, richer and happier. Over the years, I’ve had the pleasure of meeting many hard-working people from all walks of life, and far too many of them wonder if they can ever afford to retire. I try to assure them, as I would like to try and assure you, that the key to a smarter, richer and happier retirement is knowledge. It’s not about working harder; it’s about planning smarter, because the best way to achieve a smarter retirement is to make sure you retire on your terms, not someone else’s.

How do you do this? In simplest terms, you start by focusing on what’s truly important to you and then build a plan to make it happen. If you have the right plan (and stick to it), you’ll not only retire smarter, richer and happier, you’ll achieve what every prospective retiree wants most: a stress-free retirement. However, a retirement plan isn’t a set-it and forget-it document. It should be flexible and capable of continually evolving as situations change and needs change. Finally, in order to build a good plan you first need to be clear about what retirement is—and what it isn’t.

4. Adjustment stage

About five or six years into retirement, you’ll pretty much know what your spending patterns are, and it  may be time to make an adjustment in your income requirements, either up or down. But the bigger adjustment may be an emotional one. Some retirees have a hard time accepting retirement and have trouble feeling like “useful” members of society.

5. Legacy stage

The five stage of the retirement process is the Legacy  stage. Although giving back and leaving an inheritance behind is always important to retirees, they become more urgent needs later in retirement when health and activity levels decline and it becomes time to revisit one’s will and put one’s affairs in order.

Rachel and Mike

Understanding how to manage these five stages—Dreams, Reality, Transition, Adjustment and Legacy—is the key to a stress-free retirement. In order to help you see how the process works, we’ll need a guide (actually more than one) to help us through the journey. To do this, I’ve enlisted the help of a Vancouver couple, Rachel and Mike Haverstock. For reasons of confidentiality, Rachel and Mike and their extended family are fictional composites of some real world couples I have worked with over the years.

When we first meet Mike and Rachel, they are nearing retirement age and grappling with many of the retirement issues you may now be facing. They are going to journey through the five stages of retirement. Along the way, they’re going to learn that money isn’t the most critical aspect of the planning process, that income replacement plans come
in all shapes and sizes, and that sometimes it is better to give than receive. The story of how the Haverstocks overcame their financial and life challenges to achieve a happy, stress-free retirement is what this book is all about.

Let’s get started.

Part 1

Dreams

Chapter 1

A swift kick to the noggin

I first met Rachel and Mike while watching my daughter Sarah play soccer. It was one of those bone-chilling April afternoons that can send even the most attentive parents drifting off into guilty fantasies of warm living rooms, mulled wine and hot chili. Actually, anything hot or alcoholic would do, I thought as I saw Sarah streak past her defender, a big girl who was a tad slow on her feet.

My heart started to race as Sarah neared the goal, but her shot went wide. She ran back to defend, and as she passed me, I gave her a big smile. “Way to go Sarah!” I shouted. “You ran circles around that girl. I’m proud of you.” She rewarded me with a hopelessly sarcastic smirk and disappeared down the field. She couldn’t care less about me or the cold or hot chili. She was caught up in the game while I was caught up wishing I’d brought another coat or three.

“I’m guessing that’s your daughter,” said the voice next to me.

I turned to the man bundled up next to me. “You guessed right,” I said, beaming.

He nodded. “She’s good. Fast. Athletic.”

“Thanks. I think so too. But today doesn’t seem to be her day.”

“We saw you at the Melnyks’ party,” he said.

“Oh, yes?” I answered vaguely, feeling bad that I didn’t remember seeing him.

The woman beside him leaned forward. “You’re their financial advisor, aren’t you?”

“Guilty as charged,” I said. “They’ve mentioned your name.”

“Have they?” I said, waiting for the other shoe to drop. “They say you’re pretty good.”

“Do they?” I said, relieved. “Well, thank you. I mean, I must thank them,” I said awkwardly. “I try to be of help to all my clients.”

I felt my face getting flushed despite the cold. Compliments, even indirect ones, just aren’t my strong suit.

“My name is Rachel Haverstock. And this is my husband Mike. We’d like to ask you some questions,” she said. “That is, if you have the time.”

“Of course,” I replied.

Suddenly, a series of shouts erupted from the field  and we turned our attention back to the game. There was a flurry of activity near the other team’s goal, culminating with their goalie making a miraculous save and then holding onto the ball for dear life. As I watched her finally decide to kick the ball up field, I began to understand why soccer games so often end in nil-nil draws. Unlike hockey, where there may be 30 or more shots on goal per team, in pro soccer (English Premier League, for example) you can often count the number of chances on the fingers of one hand.

I noticed Mike staring at me, and giving me a rather strange look. “A friend of ours passed away recently and it’s got us thinking about our retirement,” he said quietly. “May I ask you a question?”

“Shoot.” I was ready for any retirement question people could throw at me, or so I thought. Year after year, I hear the same questions from prospective retirees:

Can I afford to retire?
Will I outlive my money?
What should I do to prepare?

Not Mike. His question surprised me.

“How do you take 30 years of savings and use it to finance  a retirement that will probably last just as long?” he asked.

“It’s a great question,” I said, and I meant it.

“We think so, too. It’s a question we keep asking ourselves,” said Rachel.

“Well?” Mike blurted out. “You’re the expert. How do you do it?” I like to think that remaining calm under pressure is one of my biggest assets, and I could see that Mike clearly enjoyed putting people under the gun. “I may be an expert,” I responded calmly, “but it isn’t a question that can be answered on a soccer field.  And to be frank, there’s a more pertinent question you may want to ask first.  

“Oh? What’s that?” 

I looked at him long and hard for a moment.

“What exactly do you want to do during your retirement?” I asked.

“Hmm. That’s a good one,” said Mike, looking at me with grudging respect.

“I know what I want to do,” said Rachel brightly. “When I stop teaching, I’m going to finish writing my novel.”

“You mean start it, don’t you?” Mike said, laughing. “Otherwise it’s going to be a very thin book.”

“Well, what about you, Mr. Smarty-Pants?” Rachel fired back. “What do you want to do when you retire?”

“I’m not sure. But watching you write your novel isn’t exactly at the top of my bucket list.” Mike paused to reflect. “I guess I haven’t really thought about it very much.”

“You’re not alone,” I told them. “Most of the couples I know who are nearing retirement haven’t thought it through either.”

They looked at me through newly inquisitive eyes.

There was another wild skirmish on the fi this time near Sarah’s goal, but once again the shot went wide. Soccer goalies lead a charmed life, I thought to myself.

“Does this happen to you a lot?” Rachel asked.

“Does what happen a lot?” I asked, turning back to her.

“People asking you if they can afford to retire, when they don’t even know what they’re retiring to?”

I smiled. “It’s not always the easiest question to answer. But I think it’s important to ask it. You see, over time I’ve begun to realize I’m not really in the business of giving financial advice.”

“Really?” said Mike, his skepticism returning with a bang. “So what business are you in?”

“I guess you could say I’m in the happiness business.”

There was dead silence. Suddenly, Mike and Rachel broke out laughing.

I laughed along with them. “When people are looking for retirement advice, they usually want financial advice,” I told them. “But instead of starting with their finances, I try to get them to figure out what’s truly important to them. In other words, what makes them truly happy.”

“But  shouldn’t we already  know?  I mean, we’ve  spent  years working hard so we could do what we like when we wind down.” “I agree with you in theory, but in reality most people don’t.”

“Why is—I mean how is that possible?” Rachel asked, incredulously. “The simple answer is that too many of us are chasing instead of living.”

“You mean living to work instead of working to live.”

“Something like that. The happiest people seem to be those who develop a wide range of interests outside their work. And when they retire, they can plan their retirement around these interests, which will give more meaning and satisfaction to their lives.”

“Hmm, I never thought of it that way,” Rachel said.

“I think it’s really important to try and make sure we don’t have any regrets, especially in retirement. Do you remember that Sinatra song, ‘My Way’?”

“Yeah. A Canadian, Paul Anka, wrote the lyrics,” Mike said. “I’ve always hated that song,” said Rachel.

“Actually, me too,” I said. “But the opening lyrics always stuck with me. Especially this part: ‘Regrets, I’ve had a few. But then again, too few to mention’.”

I sang the verse quietly but slightly out of tune.

“I hope you’re not planning to appear on The Voice,” said Mike. “You’d be wasting your time.”

“I know it,” I said, smiling back. “The point is, no one wants to have any regrets in life. This is especially true when you retire; and based on many of my conversations with elderly retirees, it’s even more so when you’re nudging closer to the end of life. Anyway, I read an article recently that really puts things into perspective. It was called the Top Five Regrets of the Dying,2  and it was written by a nurse who had cared for palliative patients for many years. Would you like to hear what the top five regrets are?”

“I bet I know what one of them is,” Mike said. “We’re all ears, Mike,” said Rachel.

Mike smiled thinly. “‘I wish I hadn’t spent so much time in the office,” he said, looking hard at Rachel.

“Yes, you’re right,” I said agreeably. “That was one of them.” “Thanks Mike. I knew you’d find a way to take a dig at me,” Rachel added, staring back at Mike.

“Now why would I do that?” Mike asked innocently. “You love your work. Heck, you’re married to your work. Have I ever tried to get between you and the love of your life?”

“Come off it, Mike. You love your work, too. You’ve spent many a weekend preparing for Council meetings.”

“Don’t exaggerate, Rachel. I might have spent maybe two weekends working over the past year. When the kids were growing up, I always made sure I was home to cook dinner.”

Rachel sighed, knowing she wasn’t going to win this argument, and turned to me. “What were the other top regrets?”

“Yeah,” said Mike with a drawl. “We’re just dyin’ to know.”

“Be quiet, smarty-pants. This is important.” She turned back to me. “Please, go ahead.”

“I’ll tell you the one regret that was most interesting to me,” I said, reaching back into my memory bank. “‘I wish I’d let myself be happier’.”

“Yes. That’s a good one,” Rachel said. “I’m a firm believer that happiness is a choice.”

“So is Martin Seligman. I heard him give a speech recently. Seligman is known as the Professor of Happiness. He teaches happiness studies at the University of Pennsylvania.”

“What?” Mike was incredulous. “They actually have such a position?”

“He’s a professor of Psychology. But everyone calls him the Happiness Professor because he teaches positive psychology. He wrote a book about it called Authentic Happiness.”

“You still haven’t answered my question,” Mike interjected. “How do you take a half a lifetime of savings and use it to finance a retirement that will probably last just as long?”

“You haven’t been listening, Mike,” said Rachel. “That’s not the right question to ask.”

“No, Rachel, that’s not entirely true,” I said, gazing at them thoughtfully. They were both right but in different ways. “Mike is right. It’s still a great question, and it needs answering.”

Mike looked very pleased with himself.

“Just not today,” I added, and Mike’s shoulders slumped. “I’ll be able to give you a full explanation when we meet. Speaking of which, would you have time to meet at my office at the end of the month?”

“Sure.” Mike checked his smartphone. “How about we make it Saturday morning, the twenty-sev—”

Thump!

A soccer ball bounced off Mike’s head. He staggered.

“Oh darling! Are you all right?” Rachel cried, reaching over to comfort her husband.

Mike rubbed his head. “What happened?” he asked.

“Look.” Rachel showed him the ball. “I think someone was trying to give you a swift kick to the noggin.”

Mike laughed. “They’d better aim a little lower next time. That’s where my brains are.”

I chuckled. So Mike had a sense of humour, after all.

As Rachel handed the ball to the referee, I looked at her and Mike a little more closely, trying to estimate their age. They were probably in their mid to late fifties which is a common age to be thinking about retirement, but a little old to be following a child at a soccer game. But you never know, I thought to myself, things have changed and it isn’t that rare to see older couples having children at a later age these days.

“What brings you to the game?” I asked them. “Is your daughter playing?”

They smiled agreeably. “Thanks for the compliment, but no, our children are all grown up,” said Rachel.

• Followed by: What exactly do you want to do during your retirement?

Chapter 2

What do I want to retire to?

A difference of opinion

It was the last Saturday of April, and while most Canadians were filing their tax returns, Mike and Rachel were filing into my office for their first retirement planning session (they had filed their tax returns early this year).

Here is what I knew about them so far:

Rachel, aged 60, was an English professor. She was born on an apple farm in the Okanagan Valley, but unlike her four siblings she was a voracious reader. At age ten she wrote her first book report, a 30-page treatise on Jane Eyre. All she wanted to do through high school and beyond was to read and write about books. By the time she was 19, she had read every one of the Hundred Greatest Books Ever Written (her favourite aunt was kind enough to gift her a subscription). It was only natural that she became an English professor. Her “money personality” could best be described as methodical, conservative and risk averse.

Mike, aged 55, has been an urban planner for the city of Burnaby for over 30 years. A big part of his job involves making presentations to the Permit Board and City Council on land development and rezoning projects, some of which could get quite contentious. In the past few years, Burnaby has been growing so fast that zoning laws have been relaxed to allow more density; this has made his job even tougher as significant tensions have emerged between developers and residents of the community. Mike Haverstock’s “money personality” was a little harder to define and a lot less predictable than Rachel’s.

“We have some news for you,” Mike added. “We’ve figured out what we want to do when we retire.”

“Hey, that’s great.”

“No, actually, it’s not so great,” Rachel said quietly. “Oh? Why’s that?” I said, puzzled.

“You’ll recall that Rachel wanted to finish her novel?”

“Yes. I think it’s a wonderful way for Rachel to keep busy and productive after she stops teaching.”

“Even if it’s the thinnest novel ever written?” Rachel asked Mike drily. “I was just teasing about that, Rachel,” Mike said. “Anyway, Clay, over the past few weeks I’ve been thinking about what I’m going to do when I retire. Things have crystallized in my mind.” “Good for you.”

“I’ve decided I want to do a little writing of my own.” “Oh? A novel?” I asked.

“No, a blog. I’m planning on calling it The Urban Mystique. I’d write articles about traffic and planning patterns in the major cities of the world.”

“That’s a great idea.”

“Thanks, I think so too. But I want this blog to be really world class, and that means I need to do a lot of hands-on research.”

“And there lies the problem.” Rachel said wearily. “To do this properly, Mike wants to visit all the major cities of the world.”

“There must be dozens, Mike,” I said in amazement.

“There aren’t as many as you might think,” Mike said sharply. “I define major cities as those considered ‘alpha cities’ by the Globalization and World Cities Research Network.4 There are 45 in all. Nine of them I’ve seen already, since they’re situated in North America.” “So that leaves 36,” said Rachel.

“That’s still a fair number,” I added. “And you want to visit all of them?”

“Yep. Every one of them. One by one. Before it’s too late to enjoy them.”

I took stock of the situation, and it didn’t look good. I turned to Rachel. “I gather you and Mike have discussed this?”

“Yes. But only in the last few days.” She stared at Mike. “What’s gotten into you?”

“What do you mean?”

“Ever since we all met up at the soccer field, you’ve become—I don’t know, almost a different person. Why the change of plans? I thought we were agreed that I would write and you would garden, and we’d do a bit of golf, and we’d visit the grandchildren every weekend.” “I never said I wanted to visit the grandchildren every week. That was your idea.”

“My idea? But what’s wrong with it? They’re your grandchildren, too.” Rachel glared at him. “Mike, I know you too well. There must be something else. What is it?”

“What’s wrong with wanting to see the world before we pop off?” he asked, staring back at her defiantly.

Rachel lowered her head. Mike continued to stare at her, waiting for a response. I looked at each of them in turn, waiting for one of them to break down and compromise.

Dead silence.

Something had to give, so I straightened my shoulders and cleared my throat. “It’s good that you’ve brought this out into the open now rather than in retirement,” I said, diving into the firestorm.  “Let’s see if there’s a compromise to be made,” I said hopefully.

Rachel raised her head and turned to Mike. “I just don’t understand you.”

Mike turned to her. “Look, honey. I’ve worked all my life at a job that I liked but didn’t love. I always felt boxed in. Now I want to unbox myself and I want to do it while I’m still healthy.”

“Fine. We’ll do some travelling so you can unbox. We could even experience the Seven Wonders of the World, if you like. But hop- scotching around the four corners of the globe for months on end isn’t what I had in mind for my retirement. How am I supposed to get my book written if we’re living out of a suitcase?”

“That’s just it,” said Mike. “That’s just what?”

“You’re going to be writing all the time. Have you ever thought about me?”

“What about you?”

“What am I supposed to be doing while you’re writing?” “I thought you wanted to play golf and garden and—”

“That’s not enough. I need more.” Mike sighed. “I guess I want to feel productive. I want to feel useful.”

Rachel gasped. “Why didn’t you tell me how you felt about this months ago, when we first started thinking of retiring?”

“Because I didn’t know what I wanted to do at the time. Now I know.”

Advising older couples about their finances can sometimes be a delicate balancing act. Advising them about their lifestyles is a truly dangerous game. Although I was determined to stay out of this one as long as I could, I had to find a way to break the impasse or this particular planning session would come to an abrupt and unproductive end. I can’t offer anyone a financial plan if I don’t know what their lifestyle is going to be like because I can’t predict what their income needs will be. I decided that before we could attempt a compromise, the first thing needed was a short cooling off period.

“Tell you what,” I said, getting up from my chair. “Let me get you some fresh coffee. While I’m gone maybe you can hash this out a bit more.”

“Wait a moment, please,” Rachel pleaded. “I’d prefer you stayed.”

“Me, too,” Mike said.

I sighed and sat down. Clearly they needed a referee to break up this fight       but I had to tread carefully, so I turned to Rachel first.

“Rachel,” I said with a conviction I did not feel. “Mike,” I said as firmly as I could. “As your advisor it’s my job to represent both of you.” They looked up at me, no doubt waiting for a miracle that I couldn’t give them. But now that I had their undivided attention, I had to go on. “That means I have to be impartial. I can favour neither of you if I want to keep your joint best interests at heart. And believe me, I do. Are you in agreement with that?”

They both nodded.

“The main purpose of this meeting was to review your retirement plans so we could work up a broad brush financial plan that would meet your retirement needs.” I paused. “It’s going to be hard to do that when I don’t exactly know what your needs are going to be. Agreed?”

They nodded again.

“Good. Then let’s review your retirement goals one at a time, see if we can dig a little deeper and find out if there’s something we’ve missed. Rachel, let’s start with you.” Rachel nodded. “Your retirement dream is to finish your novel. What’s involved in making that happen, and how much time is that going to take you?”

Rachel thought about this for a moment.

“I’ve written the first 60 pages,” she said. “Since this is a historical novel, the setting has to be well researched. To get it done, I think I would need four or five hours a day of good, solid work. I’d probably need 6 months of research and another 12 to 18 months of actual writing. So 24 months total time if I was disciplined.”

“Okay, good.”

“That’s not my only retirement wish, however. I want to be with my grandkids, as well. I want to see them grow up and I want to be there for their birthdays and Christmas and maybe some family vacations—that is, if Steve and Charlotte don’t mind us tagging along.”

“All right. Thanks Rachel.”

I turned my attention to Mike. “Mike, your retirement dream is to write a blog about urban  planning. What’s  involved  in  making that happen, and how much time is that going to take to set up and maintain?”

“Setting up the blog should be a piece of cake. It shouldn’t take too long. A friend of mine said he was up and running in a day or so and his blog looks great. Content-wise, it will take much longer. After all, I want it to be a site that people go to on a regular basis for fresh insight and analysis. I’m guessing each article would be a minimum of eight hundred to one thousand words. Each post, or maybe a group of posts if I need the space and time, would focus on a different city. And, of course, all my posts would incorporate original, hands-on research.”

“How regularly do you plan to post?”

“Good question.” Mike frowned. “I think I would aim for once a week although it might end up being bimonthly.”

“How much time would your blog need?”

“I would say half a day to write and polish each post, excluding the research of course. To do the research, I would—I mean we would— need to visit the city, sightsee, ride their transportation systems, and study their plans, so I would say a minimum of a week per city, longer if we have to travel to Asia or South America, of course.”

“Of course,” said Rachel with more than a hint of sarcasm.

“That said, I think if we plan it right we could combine certain cities into three- or four-week trips,” Mike said, ignoring her.

“Okay,” I said. “You’re still looking at 36 cities—”

“I’d guess more than half of them could be combined into single trips,” Mike interjected happily.

“So let’s say nine combined trips and 18 single trips, then. That would be a total of 27 trips, right?”

“Yes, that’s about right.”

I looked at Rachel but she was staring off into space, clearly wanting no part of this discussion.

“That’s a lot of trips, Mike, any way you care to look at it.” “Yeah, I know. But I don’t see any other way.”

“There might be another option.” “Oh? What’s that?”

“I’m no expert on urban planning, but I have an acquaintance who blogs on economics, and I have to say he’s brilliant at it. Among other things, he talks about what’s going on from an economics and policies perspective in many different countries, and the impact on the citizens of those countries.”

“What’s your point?”

“He only travels abroad once a year.”

“Look, maybe he’s travelled all over the world already. Maybe economists don’t need to see how things look at street level like urban planners do.”

“Maybe.”

“What are you getting at?”

“Needs versus wants. Mike, you want to write a blog. Rachel, you want to finish  your book, right? Those are your wants. But are they your needs?”

“Well they’re not needs like food, clothing and shelter, if that’s what you mean,” Mike said.

“But they’re not simply wants, like jewelry or designer jeans, either,” added Rachel.

“Exactly,” I said. “Finishing your book is more than just a want.

And for you, Mike, writing your blog is more than a want.”

“Are you saying they’re less important than a need?” Mike asked. “Not at all. Economists like my friend I just spoke of—along with a famous psychologist you’ve probably heard of named Abraham Maslow⁵—have done a good job differentiating between wants and needs. But in retirement, wants and needs are a little different⁶. That’s because in retirement, most people want to do more than sit in their rocking chair and receive their monthly retirement cheque. They want to find some meaning and purpose before they get too old to bother. In retirement, psychological needs trump everything but financial needs. And psychological needs are mainly about lifestyle—”

“Because your economist friend travels very rarely, you’re suggesting that I might not need to travel as much as I think I do?”

“It’s hard to say definitely, of course. Everyone is different. But it’s at least worth thinking about, isn’t it?”

Mike rested his jaw on his hands and pondered this.

“What’s truly important to you, Mike? Is it the travel? Or is it the feeling of being useful and productive in retirement?”

A light went on in Mike’s eyes. “Ah, I see where you’re going with this. It’s a good point. My need to write a blog and feel productive is a strong one and it won’t go away in retirement, I know that. But my desire to travel extensively to write that blog is just that—a luxury, not a need.”

Rachel looked at him with relief. “So you’d be okay with the occasional trip abroad, rather than multiple trips a year?”

Mike smiled at her. “Maybe. Let me think about it.” “And no five-star restaurants and hotels?”

“Absolutely not! We’re not rich and we’re not about to start pretending we are at our age.”

“Thank you!” Rachel exclaimed, jumping up and hugging him. “You had me worried for a while.”

Mike smiled and hugged her back.

Mike and Rachel seemed to have reached a consensus about their retirement goals. They now knew what they were retiring to, and what would make them happy together, day by day, as a couple. Now we needed to draw up a financial roadmap to make it happen.

Chapter summary

• Most of us wait until we retire before putting put a plan together, if we plan at all. Smarter retirees put a plan together five years or so before they retire.
• Most of us focus solely on the financials when we put a plan together. Smarter retirees fill their retirement plans with a mosaic of meaningful activities.
• Most of us lack the proper perspective when we put a plan together. Smarter retirees incorporate a lifetime of personal choices and insights to give their plan texture, resilience and fl.
• To retire the way you want, on your terms, you really have two choices. You can either self-educate about your finances⁷ or you can hire a good advisor to help you (or both).

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