Finance 3. Part-time work: think about it Some snowbirds look forward to the last day of work as truly being their last day of work. For others, retirement is the time when work becomes less of a thing which they have to do, and more of something that they want to do – particularly in the early years of your retirement, when people tend to miss the sense of purpose and personal challenge that work often offers. There’s nothing wrong with either decision. But because whatever you decide can have a big impact on other, important elements of your retirement (your income, your taxes, your ability to fund bucket list items, etc.), it makes sense to think about how some form of part-time work fits into your retirement, if at all. These days, more and more people are using early retirement as a time of transition; a time to try out a part-time job in a completely different field, for example. Or a time to take on some consulting work or a freelance gig once in a while. Others use retirement as a time to try out a small business idea which they’ve always wanted to explore. And these days, it’s never been easier to turn a hobby – jewellery-making, photography, fishing, music, whatever – into a part-time business (or “side hustle,” as the younger crowd calls it) by selling wares online, or by coaching, teaching or guiding others in how to do whatever it is you love to do. 4. Safety net: build it Safety is something that everyone needs. But retirees need it even more. If a financial disaster arises during retirement, there’ll be less time to recover, and usually a lot less income to build back with. Unless you’re fortunate enough to be blessed with an extremely large net worth, make financial protection a priority. Take a look at the various financial risks that you face with your savings and assets, with your debts and liabilities, and with your health. If you don’t have a “rainy day” or “emergency” fund tucked away in an easily accessible savings or chequing account (and no, a home equity line of credit is not the same thing), build one. If your portfolio is overloaded with speculative positions, trim them back. If you have a mortgage or other debt that hasn’t yet been paid off, come up with a plan to do so. If it’s been a while since you’ve assessed your insurance needs – life insurance, home insurance, health insurance, critical illness, etc. – conduct a review of your coverage and determine whether you’re protected against catastrophic loss on any or all of your assets. 2. Income: protect and maximize Closely related to the above. Income is always important. But, without a regular paycheque, protecting and maximizing that income becomes an even greater priority in retirement. Start with an analysis of your monthly income: Canada Pension Plan and/or Old Age Security benefits, a company pension if you’re fortunate enough to have one, rent from a rental property or basement suite, and also the income which you might withdraw monthly from your investment portfolio. For each one, ask yourself the following questions: how secure is it? Is there a potential for it to fluctuate in the coming years? Is there anything that you can do to make it more stable, or even grow? With some income sources, the answer will be no: your CPP or company pension might increase slightly with inflation, for example, but the amounts are likely to be set at the time you start to receive them. With other income sources, there might be opportunity to minimize the volatility: moving your allocation from equities into government bonds might improve the stability of the income from your investment portfolio, for example. And, in some cases, there might even be an opportunity to boost your income: building a back deck on your rental property, for example, might enable you to charge more rent. Determine whether you’re interested in working part time for a few years after retirement Examine whether there’s a demand for consulting or freelance work in your field Ask yourself: is there a small business idea which you’d like to explore? Explore ways to “monetize” a hobby or interest that you have Do you have a rainy day fund? Is it sufficient to fund several months of baseline expenses? Have you paid off any outstanding debts which you carried into retirement? What about insurance? Do you have enough? If you’re not sure, do you know a professional who can perform an audit for you? Create a “disaster game plan”; identify expenses that you could cut if worse comes to worst List sources of retirement income Assess the security of those income sources: how likely are they to change? Determine how you can improve or boost income from existing sources 30 | www.snowbirds.org
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