As a young adult I watched insurance company commercials that offered investment programs for “Freedom 55”.  Of course, I didn’t pay much attention then – all those smiling, grey-haired people wandering around on the beach – but now that I’m at that retirement age it’s looking pretty good.

How Do You Choose Your Retirement Date?

The problem that many people face is that they don’t know if they have the resources to be able to retire at 55, or even at the standard retirement age of 65.  What happened to the time?

Like many people my age I am ready for a life of leisure but I worry that 1) I won’t have enough income to support myself and 2) that I’ll use up all the money I have invested too quickly.

Related: Why Baby Boomers Aren’t Prepared For Retirement

I have never worried about the effects of market fluctuations on my, mainly stock, portfolio as I was always receiving dividends regardless of the share price and total value.  The thought of having to deplete my portfolio by selling the shares, though, bothers me.  But I also don’t want to keep working until I’m 70!

Money and health are the two biggest concerns when it comes to choosing your retirement age.  Not having enough money means extending your working career.  Not having good health often puts an end to the amount of work you are able to do.

Statistics show that in 2006 over 300,000 Canadians between the ages of 55 and 64 had an average income of less than $7,000 because of a disability.  If you’ve been laid off or “down-sized” and either don’t want to, or are unable to get another job because of age discrimination (it happens) you are forced into retiring.

Understanding Your Retirement Age

If you want to be happy you have to have a sense of control over the whole process.  First figure out how much you’ll need to live on.  A common guideline is 70% of your current salary, but everyone is different.

People think their costs will immediately go down but many retirees have a list of experiences they want to get on with – travel, new hobbies, etc – at least in the early years that can prove more costly than anticipated and throw your budget out of whack.  At least most of your larger expenses – kids, mortgage – should hopefully be gone by this time.

Also, don’t overlook additional expenses you may not have thought of.  You will be responsible for remitting your own income tax now, either monthly or quarterly.  You may not need as much life insurance, but you may need long-term care insurance.  You will have to replace your health care benefits if they were covered by your employer.

Next, figure out how much you’ll receive in monthly income if you retire.  Calculate the benefits you know you’re guaranteed to receive such as CPP, OAS and any pension you may receive from your employers (but only if the amount is guaranteed, such as in a Defined Benefit Pension).

Don’t just rely on the figures given in articles and publications.  They usually quote the maximum benefits available and that may not apply to you.  Go to Human Resources and Skills Development Canada and order your CPP statement of contributions so you can calculate the numbers (also on this site).

Make Your Retirement Plan Unique

Once you come up with a figure you’d actually have to live on, you can cut back where necessary.  Impossible, you say?  Now you will know how much extra you will need.  How much can come from investment income?  Can you purchase an annuity?

How long will your capital last if you have to start depleting it?  Do you need to save more?  Work longer?  Work part-time to supplement your income?  Do the groundwork now so you won’t be surprised.

Don’t wait until you’re heading out the office door clutching your gold watch to develop some interests you can carry into retirement.

We’ve all heard about the retired husband who follows his wife around, offering “suggestions” and trying to help out but only succeeding in disrupting her routine until she’s ready to throw him out of the house.

Have the foresight to develop a hobby, find a place to volunteer, or whatever makes you smile.

Get a clear sense of what life will be like so you can focus on making good decisions when you need to.  If you’ve been saving and planning for some time you may just need to tweak the plan a bit as you get closer to the date.

Retiring boomers aren’t just going to go pack a suitcase and quietly head off to Retirement Village.  They are a new breed of retirees – independent, self-directed and determined to create new experiences for themselves for as long as they can – just as they always have been.

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