Although retirement planning should be a lifelong endeavour, many experts agree that five years away from the transition to deck chairs from desk chairs is a good time frame to really get your clients thinking about this stage of their lives. But whether it’s five years or five days before that transition, flexibility is key to any plan.

What to do?
First, ask your clients what they want to do in their retirement, says Lee Anne Davies, head of retirement strategies with Toronto-based Royal Bank of Canada. “It might be building a business, it might be travelling, it might be building another home.”

Be sure to discuss what those goals will do to cash flow and how long that project or the client’s interest may last, she adds. “Test driving” retirement by working less or relocating for a short time to where they would like to retire will also help a client determine if that’s what they really want, Davies points out.

More Than Numbers
It’s important to discuss the emotional aspects as well as the logistics. “Often, our work is our connection to life,” says Mary Lennox, a regional director with Winnipeg-based Investors Group Inc. in Ottawa. So, clients need to figure out a way on how they are going to spend their days in retirement that make them feel rewarded and useful Thus, it’s important to take time to recognize and talk about the anxiety a client may feel and how he or she plans to fill his or her time during retirement, she says.

Break From Tradition
Any stage of life is unpredictable and it’s important to make sure your client is invested in the right products to meet that uncertainty, says Brad Brain, a certified financial planner with Burlington, Ont.-based Manulife Securities Inc. “There’s no cookie-cutter, one-size-fits-all solution here.”

A client may believe that investing all their assets into guaranteed investment certificates immediately after retirement is the best option because that’s what been done traditionally; however, longer retirements are changing that. “Especially with inflation as a factor here,” says Brain. “To have the money sitting around at 1%-2% [growth] is probably flirting with disaster.”

What to Implement and When?
Make sure your client understands all potential sources of income and when it’s best to implement them, says Lennox. Sources can be from the government contribution of the Canada Pension Plan to company pensions to the clients’ own RRSP or other retirement contributions. A client’s own contribution is very important because it can supplement other forms of income to allow them to “do the things [they] want to do,” says Lennox.

Where Will You Live?
Asking clients if or whether they intend to move in the future — or immediately after retirement — is an important topic to discuss. “That part can free up money but also cost a lot of money to change housing,” says Davies.

Marital Status Changes
Changes in marital status can, of course, affect retirement income as well, so it’s important to discuss it with clients. If a single client plans to remarry in the future it may have an impact on estate planning, says Davies. However, if a client’s partner is in ill health, then the potential change in retirement income needs to be evaluated. “We have those hard conversations with clients,” says Davies. “That’s what gets clients prepared.”

Watch Out for Taxes
As you and your clients work out their yearly or monthly income, clients can often forget about taxes. In particularly, clients may want to spend money on big-ticket items in the first few years and it’s important to talk to them about how to withdraw their money at that time. Taxes can be “quite unsettling for some people,” in retirement because it’s up to them to remit them to the government instead of their employer, says Davies.

Keep That Flexibility In Retirement
The work doesn’t end with the retirement party, as clients may change their minds or have plans that they never articulated before. “Maybe the guy just goes nuts because all of a sudden all those things he’s wanted to do for years are pent up and now he gets a chance to do them,” Brain says. “So, now he’s buying the RV and he’s travelling across the country.”

IE