The Financial Post has just published my review of a new book by Vancouver-based financial advisor Clay Gillespie: Create the Retirement You Really Want: And Retire Smarter, Richer and Happier.
You can find the online review by clicking on this highlighted headline: From Dreams to Legacy: New Book Details the 5 Stages of Retirement.
And below is an excerpt from the chapter highlighted in the review. We may also run at least one other excerpt in the coming weeks. Over to you, Clay!
By Clay Gillespie
Special the Financial Independence Hub
Retirement isn’t an event; it’s a process, and it begins years before you actually retire. Working with hundreds of clients over many decades, I’ve come to realize that retirement success is best achieved in five distinct stages. Each stage reflects a different aspect of who you are and where you want to be in retirement, and it all begins with a dream.
1.) Dreams stage
The Dreams stage of retirement typically begins about five or six years prior to actual retirement. This is the time when people have decided to retire but aren’t yet sure of the date. It’s the time where retirement goals and hopes for the future become defined and a preliminary retirement plan is developed. For couples, especially, retiring now becomes an ongoing topic of discussion, not just something brought up in passing.
2.) Reality stage
The Reality stage usually occurs between 6 and 24 months before retirement and its temporal proximity really starts to hit home. Lifestyle issues come into greater focus, along with fears that one’s retirement nest egg may be inadequate. This is a crucial time from a planning perspective. Old Age Security (OAS) and Canada Pension Plan/Quebec Pension Plan (CPP/QPP) applications need to be made, income streams need to be consolidated, taxes need to be minimized and portfolios need to be optimized for income and growth.
3. Transition stage
The third stage of the retirement process, becoming a retiree, usually occurs between the ages of 62 and 70. It is a very emotional period, and for those holding private pensions, the ongoing shift from defined benefits plans to a world populated by defined contribution plans makes it an even more emotional time. Suddenly, a large pool of money has to be redeployed and transformed into income.
4. Adjustment stage
About five or six years into retirement, you’ll pretty much know what your spending patterns are, and it may be time to make an adjustment in your income requirements, either up or down. But the bigger adjustment may be an emotional one. Some retirees have a hard time accepting retirement and have trouble feeling like “useful” members of society.
5. Legacy stage
The final stage of the retirement process is the Legacy stage. Although giving back and leaving an inheritance behind is always important to retirees, they become more urgent needs later in retirement when health and activity levels decline and it becomes time to revisit one’s will and put one’s affairs in order.
Rachel and Mike
Understanding how to manage these five stages — Dreams, Reality, Transition, Adjustment and Legacy — is the key to a stress-free retirement. In order to help you see how the process works, we’ll need a guide (actually more than one) to help us through the journey. To do this, I’ve enlisted the help of a Vancouver couple, Rachel and Mike Haverstock. For reasons of confidentiality, Rachel and Mike and their extended family are fictional composites of some real world couples I have worked with over the years.
When we first meet Mike and Rachel, they are nearing retirement age and grappling with many of the retirement issues you may now be facing. They are going to journey through the five stages of retirement. Along the way, they’re going to learn that money isn’t the most critical aspect of the planning process, that income replacement plans come in all shapes and sizes, and that sometimes it is better to give than receive. The story of how the Haverstocks overcame their financial and life challenges to achieve a happy, stress-free retirement is what this book is all about.
Clay Gillespie is Managing Director of Rogers Group Financial, a Vancouver-based financial panning and advisory firm founded in 1973. This excerpt from Create the Retirement You Really Want is published here with the author’s permission.