Sign Up

Step 5: Finding financial balance

This is where you bring the plan together by summarizing all of the retirement planning steps and tying all of the loose ends together – expenses, income, assets and liabilities.

Simply, will your retirement plan support your retirement? Will your retirement be big, elaborate and expensive or is it going to be simple, comfortable and relaxed?

If the Income Surplus/Deficit line in your Retirement Budget Estimator shows that you will have sufficient income to cover your expenses in retirement, then you are well on your way to enjoying a financially successful retirement. Well done. Enjoy!

If on the other hand your Income Surplus/Deficit line shows a negative number, then your plan will require more work. You will need to go back and revisit the estimates calculated in steps two, three and four– retirement expenses, net worth and income. Do not get discouraged, one of the great aspects about developing a retirement plan is that you have the ability to change, modify and improve the plan.

Begin by revisiting each step, in the same order, and reviewing each line to see if any can be improved – decrease your retirement expenses, increase your net worth, or increase your income.

Remember: Before you start tearing apart your estimates, review each line for accuracy and importance. Maybe instead of taking two trips a year, one trip would be just fine. Maybe you would be just as happy with an inside stateroom on the cruise ship. Maybe you might want to downsize from the family home a little earlier. Maybe instead of seven weeks in Hawaii, five would be just fine.

Review and refine your estimates for each line before you decide to make major decisions such as postponing or canceling your retirement altogether.

Note: Do not expect your plan to be perfect the first time around. Very rarely will you design perfect retirement plan on your first attempt. This is because our desired retirement lifestyle is often greater than our net worth and income can support. It is more enjoyable for us to envision a retirement without the constraining details of income and expenses. When reviewing your estimates, focus on those activities that make you happiest. One of the greatest benefits of reaching retirement age is we have gained a life-time of experience and knowledge that helps us to know what is important to us and what truly makes us happy.

Consider some alternative retirement scenarios

When reviewing the steps, you may want to consider and compare a couple of alternative retirement scenarios, as in the following examples:

  • Delay your retirement date to give yourself more time to increase your net worth, possibly reduce some expenses going into retirement and building a larger pension income.
  • You might consider working part-time or doing contract work as you transition into full retirement.
  • Look at alternative options for accomplishing your travel plans – charter a yacht instead of buying one, buy a trailer instead of a recreation vehicle, travel on repositioning cruises instead of during the peak cruising seasons.

You might also consider supplementing your retirement income by using a portion of your accumulated savings, as in these scenarios:

  • Especially, if you are retiring prior to being eligible for government pensions (such as CPP, QPP or OAS) and want to bridge the gap between the date of your retirement and the date you receive these pensions.
  • You want to do the majority of your traveling in the first ten years or so of your retirement, while you have the health and desire to travel.

If you plan to downsize from your current home five or ten years into retirement and thereby freeing up additional capital. Using a portion of your savings until you downsize can bridge your retirement income shortfall.

Remember: When analyzing alternative retirement options, try to be creative. You might find the alternatives are not workable or you just might surprise yourself with the possibilities.

Back To Top

Quick Navigation

  1. How to Get Started:


  2. Videos:

    Financial Planning & Budget:

  3. Tools & Calculators:

    Other Resources: