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Les Cunliffe

You believe your retirement plan is all set, you've been contributing to your company pension plan for years and you're regularly making RRSP contributions. That's all you need to do, right?

Not so fast, says Tina Di Vito, head of the BMO Retirement Institute, whose latest book is 52 ways to wreck your retirement . . . and how to rescue it , which was released last month.

One big mistake people make about retirement is "thinking you have a plan when you don't," she says. "People think that making an RRSP contribution or participating in a company pension plan is what retirement planning is all about."

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"In fact, it's not. It goes way beyond that."

Have a retirement plan

To have a complete retirement plan, people need to look at both the financial and non-financial parts of their retirement. For example, when will you retire? Will you retire early or wait? What will you do in your retirement? Do you plan to travel? Go to the theatre? Will you pursue a hobby? Where will you live? Will you sell your house? Rent? Will you keep or sell the cottage? All these decisions need to be factored into your plan by tabulating their cost and working backward to ensure you can afford to do what you want, she says.

"There really is no one-size-fits-all when it comes to a retirement plan," Ms. Di Vito adds.

While many people fail to put in place a detailed retirement plan, many women don't start working on a plan early enough because they're "fooled by feeling and looking younger than [they]are," she says.

"It's great that you look and feel young . . . but if it causes you to procrastinate and delay actually thinking about retirement or planning for retirement . . . then we're really putting ourselves in a very, very bad position," she says.

"You may wake up one day and you're 56 years old [and have retired early] . . and you haven't given much thought about what you're going to be doing in the next stage of life."

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Discuss your life in retirement

Often couples fail to look carefully at what they want their life to be like in retirement โ€“ as a pair, and as individuals, Ms. Di Vito says. That can lead to intense friction in the relationship.

Some couples don't discuss if they plan to downsize, or move, or retire to the cottage, or travel, or spend more time with friends or with the grandkids.

"You and your spouse may have very different thoughts and feelings about what retirement life is going to be like and you may have different opinions as to how you may want to spend your time during retirement," she says.

As couples work out a retirement plan they need to discuss their hopes for what they will be doing. Ms. Di Vito says couples should sit down and create a shared and independent activity list โ€“ and how to fund them.

At seminars, Ms. Di Vito says she jokes to couples that "once you retire you need to start dating โ€“ each other."

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Many couples might have been married 25 or 30 years by retirement, but have forgotten how to spend time together since they've been so busy with their careers and their kids. "In retirement you are now going to be together 24/7."

Some women, who took time off to care for their kids and aging parents, are often in their highest earning years near retirement and it doesn't always make sense for them to retire at the same time as their spouse, particularly if their husband is older, she adds.

Know your spending limits

One of the biggest mistakes people make while in retirement is "not knowing how much they can afford to spend," Ms. Di Vito says.

Retirement can be a long period of time, and you don't know how long you might live. With that uncertainty people need to make sure they know what's a comfortable spending level.

"There are issues with spending too much money and blowing through too much money too quickly," she says. "Or the opposite, where you feel you're afraid to spend" and you hold on to your money and then you don't have the kind of retirement you hoped for.

"There's got to be a balance."

Keep invested

Retirees also need to keep their funds invested during their retirement years. "If you rely on just living off the money you've accumulated at your retirement date, there's a lot of things that can happen, like taxes and inflation that will erode your purchasing power during that period of time. You absolutely have to keep up with taxes and inflation."

Retirees also need to ensure that they include estate planning and insurance as part of their retirement plan. Insurance may be needed to help your spouse if there's a sharp drop in pension plan income when you die. You also need an up-to-date will and powers of attorney so that you know decisions can still be made if you become ill or incapacitated.

"We don't want to think about those things like death and incapacity," she says. "But these sorts of things have to be done well in advance."

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About the Author
Assistant Editor, Globe Investor

Gillian Livingston started her journalism career at The Gazette at Western University. She's worked for The Financial Post, Dow Jones Newswires and The Canadian Press as a reporter for news, business, markets and Ontario politics. More

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