In our Living in Retirement blog, a recent retiree chronicles the ups and downs of her real-life retirement journey.
It's diabolical trick to play on oneself. Imagine the seven things about creating a happy and secure retirement you wish the 30-year-old you had known. Well, here's what I would have told the younger me.
The overwhelming factor is longevity: not just protecting your physical health and emotional well-being so that you're able to fully enjoy retirement, but understanding how crucial longevity is to just about every aspect of your life.
1. Stay married to the same person. I did not do this and it altered my financial position irrevocably. Divorce, in the long run, is the most expensive decision you'll ever make. So is selling your house and dividing the assets after the split. Or paying alimony. Or keeping two homes for your children. Or having children with different spouses. Or starting from scratch with a new love interest whose assets may not resemble your own.
2. If you're going to have children do it before 35. I did not do this. Try to subsidize your child's education before you retire. Start RESPs when they are born. University and college fees will continue to rise and your kids will require more degrees than ever to succeed.
3. Choose a career you can imagine doing for 35 years and stick with it. I did and it repeatedly rescued me from financial and emotional hardship. Having social capital in your field of endeavour is worth a great deal. Find your niche and become an expert. The subject I chose in university is the one I teach today.
4. Secure a job with a defined benefit pension, ideally one with a union that protects you from the wiles of a topsy-turvy job market. Union fees are negligible compared to retiring without a healthy pension. If possible, get a job as a public servant, which can be anything from working directly for a government ministry to teaching. Public service is the only environment where defined benefit pensions will remain fully funded. My pension plan allowed me to retire at 62. Without it, I would have worked full time until I turned 67 and left work without the peace of mind of knowing exactly what will be deposited in my bank account every month by the pension plan.
5. Find a financial adviser you can trust. Or spend the time and energy learning how to invest wisely on your own. Globe columnist Rob Carrick's ETF Buyers Guides are a great place to start. Make a plan and stick to it. This is where I blew it big time. In the last 25 years, I've kept the same family doctor, same dentist, same accountant and same job. Yet I've had five financial advisers and four out five were disasters. If I'd found the right financial adviser at 30 and stuck to a conservative plan, I'd be enjoying a much more secure retirement.
6. Buy the best house you afford, in a neighbourhood you adore. Stay there. Moving costs a fortune these days, factoring in everything from land transfer taxes to realtor fees to movers. All needless expenses, if you find your home early in life. Everyone I know has repeatedly lost loads of money in the stock market, but not one person I know has lost money buying real estate in large urban centres in Canada. Other than your mortgage, avoid big debts including a line of credit on your house, which erases the equity you've painstakingly built in your home. The house I purchased in Oakville in 1994 more than doubled in value when I sold it two and half years ago to move to a downtown condo. My investment portfolio hasn't come close. Today, I'm not certain downsizing for retirement was such a great decision. Condo fees and cramped space are forcing me to re-consider that move.
7. Years before your retire, develop long-standing interests that are not outrageously costly and that don't depend on your job or your family. In other words, maintain independence of mind and spirit throughout your life. Kids move away. Spouses pass away. Keep something special that belongs solely to you and that you will find satisfaction in during the darkest of times, no matter how your bank account fluctuates. If your interest is boating, you could find yourself in trouble financing this sport in your retirement years, but if it's playing chess, you're safe. I write stories, blogs and novels and no matter how my portfolio performs, a keyboard is always available.
Joyce Wayne's novel, The Cook's Temptation, will be published on Feb. 4, 2014.