Retirement isn’t what it used to be. Changes in society and the workplace — from the prevalence of contract work and the trend toward changing careers frequently to laws that outlaw mandatory retirement — are making retirement itself almost pass».

“The word ‘retirement’ creates a stereotype,” says Darrell Starrie, president and director of the private client group at Strategic Financial Concepts Inc. in Ed-monton, an affiliate of Dundee Securities Corp. “In older people, it’s generally negative.”

Starrie prefers to refer to this stage in a person’s life as “a transition.”

Starrie, a certified financial planner, professional retirement planner, chartered financial consultant and chartered life underwriter who has been in the business for 30 years, says many retirees consider “transition” a more appropriate term because they are just as likely to try their hands at another job or take another career path as spend the rest of their days playing golf.

“There are a lot of people now who will retire at 50 and do stuff for fun and some money,” Starrie says. At least one-third of his retired clients move on to another type of employment within a few years of their transition to retirement, he adds.

Whatever retired clients end up doing with their time, Starrie says, it is his job as a planner certified by the Canadian Association of Pre-Retirement Planners to help them prepare — financially and emotionally.

“They’re at a crossroads,” he says. “It’s exciting because most of them are pretty pumped up.”

The first thing he wants clients to decide is their retirement day. “It doesn’t matter who they are, they have that date in their heads,” he says. Putting it on paper makes it real — and is a good launching pad into the pre-retirement planning process that, ideally, should start at least six months before actual retirement, he says.

Here are some steps advisors should take with clients who want to prepare for their big day:

> Start Soft. An advisor should never open the conversation by demanding financial particulars from retiring clients. Starrie prefers to talk about what the client envisions in retirement before he attempts to structure a plan that will help the client achieve his or her dream. Asking clients to provide documents ahead of time — a notice of assessment from the Canada Revenue Agency, an employer pension statement, an RRSP statement, a recent Canada Pension Plan form, a will and any insurance policies, for example — can make for a more comfortable discovery meeting, as well.

> Have The Health Talk. It’s important advisors know as much as they can about the health of the client planning retirement, as well as the health status of his or her partner, says Lyle Atkins, a CAPP member, CFP and registered financial planner for Independent Financial Counsellors in Winnipeg.

It’s simply not possible to offer sound advice without that information, he adds: “We have that question right on the input form with our clients.”

Atkins recalls spending a lot of time going over a new client’s financial health years ago — only to discover deep into the planning process that the client had been battling seven types of cancer. He has not made the same mistake again.

> Explore Pension Options. Atkins spends much of an upcoming retiree’s preparation time going over pension options. One of the big questions for those with a defined-benefit pension concerns the survivor option: should a DB plan member take the 100% survivor option, which usually means reduced pension payments — or higher payments with a reduced survivor payout?

“We find that most people, when they are actually signing their pension papers, have never really looked at those pension options,” he says. “And they make the decision in two minutes.”

That’s a big mistake because a significant amount of money rests on this decision. Although the decision should be considered on a case-by-case basis, Atkins recommends as a rule of thumb that male clients with dependent partners take the 100% survivor option so that the wife isn’t left out in the cold, as odds are quite high she will outlive him.

The guarantee to the spouse translates into a lower pension, which is why so many people take the reduced two-thirds survivor payout when faced with the choice. But, Atkins says, if the husband dies, the wife will already be “losing” her partner’s old-age security and some, if not all, of his CPP payments. She will already face a drastic cut in support — without adding the sudden drop in pension.

@page_break@> Investigate Insurance Choices. Employees on group benefit plans usually can easily convert their group benefit plans to another, albeit more expensive plan from the same insurer within a month or so of retirement, says Starrie. But this generally only makes sense for uninsurable candidates, because this type of plan tends to be more expensive than other plans.

“You typically can shop around for a better rate,” he says.

Because most insurance plans are provided on a monthly basis, it’s advisable that clients take the plan offered by their insurance provider, and then check out rates elsewhere.

“We want to make sure that retiring clients don’t leave it on the table through neglect,” Starrie says. An insurance broker in his office provides a list of quotes to clients before they retire.

> Face The Forms. Clients need to know what their income is going to be well ahead of actually retiring, says Jacques Poirier, a CAPP retirement planner with Coughlin & Associates in Ottawa.

A lot of paperwork needs to be completed en route to the big day. And some of these documents, because they pass through government agencies, can take a long time to get back, Poirier says. Finding out the payments expected from a client’s CPP account, for instance, can take up to two months.

Poirier also recommends that clients contact each financial institution with which they’ve done business in order to tally up all the investments.

> Track Spending. Poirier says that it never fails to amaze him how out of touch clients are when it comes to their household budget. He recommends clients monitor their own spending for several months leading up to retirement so they have a clear idea of their needs.

Estimates are not good enough, he says, because clients are heading into a fixed-income lifestyle and need precise figures. Food costs are usually underestimated, sometimes by a significant amount.

“Even a little trip to Mac’s Milk costs you $5,” he says, “and people don’t realize that they’re doing this six times a month, over and above their regular grocery shopping. Or they pick up pizza or Chinese food instead of cooking. That can add up.”

> Create A Budget. Once spending trends have been analysed, preferably over the course of several months, a budget should be drawn up, says Poirier.

Again, it’s important that clients are realistic. Entertainment costs, for example, generally are higher in retirement when clients have more time on their hands.

“They’re retiring with 70% of their income and they think they’ll be able to do all they want to do with that. Yet they have 24 hours a day, seven days a week, to kill,” he says. “Yet, financially, they couldn’t do everything they wanted to do when they only had a weekend.”

Poirier suggests clients research the costs of the golf club membership they desire or the class they plan to take so that they can prepare for the added entertainment costs of being retired.

> Tackle The Emotional Side. Despite what the ads imply, retirement is not always smooth sailing. Atkins points out that depression can hit those in the 60-plus age bracket, and it can be especially difficult if they don’t have the support network they had all their working years.

Atkins takes a holistic approach to advising clients on their retirement, asking them, for instance, to consider carefully what they’re going to do with all their time.

“If they don’t plan properly for their leisure time, they’re going to have problems psychologically,” he says.

There’s also concern about debt. More retirees are leaving work saddled with considerable debt, Atkins says. This is worrisome, and it’s something he tries to address long before the actual retirement day so that it doesn’t add pressure when resources — financial and emotional — may be low. IE