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Retirement planning made easy: a step-by-step approach

October 24, 2014 by InvestingForMe

For many of us, planning for our retirement can feel pretty overwhelming. It’s like an elephant in the room always staring at us. And the closer we get to our retirement, the bigger that elephant seems to get!


So why does retirement planning seem like such a big deal? Why is there so much pressure around the idea? Probably because we know that it takes some proper planning and real number crunching, and who wants to sit down and do that? Where do you start? Which numbers do you crunch? Ug, right?

Well, it is ug when you don’t have someone to guide you on the right track and through the tough parts. But it’s actually quite a simple process, as we’ll show you in a new series of articles designed to walk you through the retirement planning process step by step.

The retirement process: a snapshot

Here’s what the whole retirement planning process looks like in a nutshell when it’s broken down step by step:

    • Step 1: Gather your paperwork
    • Step 2: Evaluate your present
    • Step 3: Plan for your future
    • Step 4: Monitor, measure and manage
    • Step 5: Go the extra mile

So, pretty simple stuff, really. The worst part is probably just taking the time to track down all your paperwork!

Note: If you want a plan that is realistic and ultimately successful, you need to use real, accurate, numbers. If you just guess or use estimates, you’ll end up with a plan that isn’t worth the paper it’s written on, and your retirement planning could have you working until you’re 80. So take the time to chase down the proper paperwork.

So, with that simple general overview of the retirement planning process in mind, let’s get started.

Step 1: Gather all your papers

Before you can properly begin to dream about and plan for your future retirement, you need to know where your finances stand today. That means you need to define your plan's financial starting point by gathering all your paper statements and receipts for the following items (each of which are defined in the following sections):

    • Request documents
    • Paper statements
    • Income tax returns
    • Insurance policies
    • Asset registrations


Request documents

You’re probably thinking, with all the paper and email statements you get every month, how could you be missing anything? Well, you’d be wrong! There are some documents detailing your family’s finances that you will not have on hand, and yet they’re some of the big-ticket items you’ll need if you’re going to make proper calculations for your retirement planning. These include:

  • Request your loan amortization statements: You’ll need to go to your bank, credit union, mortgage broker and ask for up-to-date amortization statements for all your loans (including mortgages, lines of credits, personal loans, car loans, etc.). You’ll need these current numbers in order to build your budget and net worth statement in Step 2: Evaluate your present.
  • Request your Pension Statement: Visit your employer’s human resources office and ask them for an up-to-date Pension Statement. Your Pension Statement will summarize the pension you have earned and it provides you with the detailed information you need to answer critical pension questions when planning for your retirement. You’ll need this information when it comes to constructing your retirement income and net worth statements in Step 3: Plan for your future.
  • Request a Personal Access Code: Visit Services Canada and, if you don’t already have one, request a Personal Access Code so you can create a My Services Canada Account. This account provides information about your Employment Insurance (EI), Canada Pension Plan (CPP), and Old Age Security (OAS) benefits. You will want to retrieve your accumulated or earned CPP benefits listed on your account summary again for Step 3: Plan for your future.

Note: Actually getting these documents can take up to two weeks, as is the case with requesting your Personal Access Code. So just be aware of this time factor and get on it! (as they say). Request your documents and account code well in advance of the time you’re going to sit down to plan so that you can avoid the frustration of missing pertinent info! (D’oh!)

Paper statements

The next set of papers you’ll need in order to complete Step 1 of planning your retirement includes your most recent statements for all of your household expenses including the following items:

    • property tax assessment
    • property insurance statements
    • auto insurance summaries
    • bank statements
    • credit card statements
    • cell phone statements
    • cable/internet statements
    • heat/electricity bill statements
    • any receipts for expenses (i.e., veterinary, transportation, etc.)
    • statements for all of your financial assets including your saving, investment, and life insurance accounts (for example, taxable accounts, RRSP, TFSA, RRIF, RESP, etc.)

Income tax returns

Your family’s last year’s income tax returns are the best source for accurate information about your income so you’ll need to add them to your pile of papers. They will give you the actual numbers for your

    • employment income
    • commission income
    • business income
    • rental income
    • pension income
    • investment income (dividends, interest, capital gains/losses)
    • alimony

Your income tax return will also provide all the deductions your employer takes from your pay cheque, numbers you’ll also need to crunch, including

    • income tax paid
    • employment and CPP premiums deducted
    • pension plan contributions
    • RRSP contributions
    • charitable donations
    • company benefit deductions
    • union and professional dues paid

Insurance policies

Next on the list to gather are your insurance policy statements. These are important to review to ensure that the amount of insurance you are carrying is appropriate to your circumstances and that the Beneficiary Designations support your estate plan. You’ll need statements for all of your policies covering

    • automobiles
    • boats
    • recreation vehicles/trailers
    • home and contents
    • rental properties
    • life
    • disabilities
    • funeral
    • business

Asset registrations

Many of your financial asset and liability registrations (i.e., mortgage, line of credit, auto loans and personal loans) will detail whose name(s) the accounts are registered in and how they are registered. For retirement planning purposes, you’ll specifically need to note how the items are registered – typically one of the following types:

    • individually, in one person’s name
    • jointly, in more than one person’s name
    • Tenants in common, in more than one person’s name with each owning a specific percentage
    • under a business name

Step 1 complete!

By now you’ll have assembled a pretty big pile of papers. (Get a box!) And yes, piles of papers are never anyone’s idea of fun. But you’re going to feel better when you have your retirement plan in order with real meaningful numbers from that carefully crafted big pile in front of you. (It’s in Step 2 that you’ll see how all those papers begin to make sense and what your retirement plan is going to look like!)

So, don’t let gathering all the paperwork intimidate or discourage you. Once the details from each piece of paper are recorded in Step 2, you can start to re-file your pile away and feel good about getting your financial house in order. And just knowing that it’s the gathering of the paperwork that is the hardest part of retirement planning means you can finally deal with the elephant in the room. It’s actually not that big a deal!



Click the link to read the first article in this series - Boomer retirement planning: not everyone safely on board!



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