Don't spend your retirement security

When it comes to your financial health in retirement, how much you set aside for your retirement years is only half the story. Equally important is how you spend what you've saved, and a recent survey indicates more than 50% of retirees aren't spending wisely.

The survey polled 800 retired and not-yet-retired Canadians age 60 to 74. 55% of seniors weren't sure how much money they would need to last throughout retirement. What's more, the majority (56%) was off target with their monthly spending in retirement; 29% spent more than expected while 27% spent less.

The survey found that this generation has taken a hands-off approach to saving and spending planning when retired. The reality is that many retirees can't afford to take chances because they may not have the pension plan or other secure income their parents had. The financial planning process doesn't end at 65, but should continue throughout your retirement.

Upon retiring, you should take stock of your assets and income to determine how much of a monthly withdrawal your finances will support. Comparing what you can afford to spend against essential monthly expenses will give you a good perspective on what you will need to do to make your money last. You may find that you need to adjust your investment portfolio, or that you can quit the part-time job you thought you'd need.

We are constantly advising our clients that during retirement their investment strategy needs to be different from their parents' approach. Whereas our parents sought to move their money into less risky investments once they retired, today's retirees often can't afford to do that. Reduced income, inflation, rising health care costs, and the very real possibility of outliving one's assets may make it necessary to continue investing in the stock market and other high-growth options.

Finally, make sure that when you are a planning to retire you should not go into it unprepared. If you don't know how you will budget during your retirement, we recommend you meet with our team. We can develop a strategy for you, focussed on three principles:

• diversify the portfolio to maintain growth
• ensure a steady income stream while retaining flexibility
• follow guidelines to achieve the right balance of spending and investment.

Your plan will be re-evaluated each year to keep pace with your financial situation.

While we realize that many people overlook the second phase of retirement planning and believe they'll be able to manage their income in retirement, we believe that unknown factors, such as market performance, life expectancy, health issues, and a person's changing wants and needs, make a holistic plan for retirement essential. We want to ensure our clients are living their retirement dreams to the fullest.