Retirement Planning vs Retirement Designing (4 minute read + video)

Retirement Planning def’n – determining if you have enough money for the rest of your life based on a annual spending amount. 

Example: Do I have enough money to retire if I spend $75,000 a year indexed to inflation for the rest of my life?

Retirement Designing def’n – a process where you define the known and desired activities and costs you will have in retirement based on the changes in your health and lifestyle.

Example: What will I do during the early, middle, and end parts of my retirement? How will my living and lifestyle costs change throughout those periods of my life? What are the predictable big expenses throughout my life (replacing a car, replacing the roof, furnace, appliances…)?

Retirement PlanningRetirement Designing
A mathematical equation that prescribes a pre-retirement savings plan that will deliver a future recurring income stream.A puzzle with many interconnected pieces of choices to make, to deliver your desired life outcomes – which is defined within the process.
Time and energy are deployed in ensuring the accuracy of the data input into the retirement calculator.Time and energy are deployed in exploring your lifestyle choices to discover the outcomes of those choices before you commit to them.
An event that occurs infrequently and where value erodes as time passes.A process that is always alive, enabling you to respond to new information as it arrives.
Forces you to fit your life choices, into your money choices.Aligns your money choices with your life choices.

The bottom line is that life is not a straight line. There are ups and down and many changes along the way. If you plan based on drawing a straight line between your starting point and end of life, you will create uncertainty, anxiety, and eventually – regret.

Designing your retirement, you will account for variability, the changes in your lifestyle and expenses. You will be able to evaluate the impact of choices BEFORE you have to make them. You will remove most of the uncertainty, eliminating anxiety and stress.

The biggest problem with Retirement Planning (and how Retirement Designing solves it.)

Retirement Planning can rob you of a better retirement lifestyle. The majority of retirement plans determine your average annual living expense, index it to inflation for the rest of your life, and determine if you have enough money or not.

Here is the problem: The plan says you get $70,000 to spend each year, but… this year you plan to take that dream vacation and you need to replace your furnace and air conditioner. You are going to need to spend $110,000 this year. How are you going to fit $110,000 in spending into your $70,000 spending limit? (See #1 in the illustration below)

This problem creates stress about today and anxiety and worries about whether you will have enough money in the future if you spend this money today.

Retirement Designing eliminates this problem by incorporating these lifestyle spending into the plan at the beginning and evaluates these choices BEFORE you have to make them. Designing your retirement will show you the variability of spending throughout your retirement to recognize that there will be years where your spending falls far below your $70,000 amount and you will be able to use some of that money to fund these higher spending years.  (See #2 in the illustration below)

Retirement Designing gives you the ability to evaluate the outcomes of your choices – BEFORE having to make them. It eliminates the stress, anxiety, and uncertainty of the variability of retirement as it is accounted for within the plan. It empowers you with clarity and confidence to have the retirement you desire!

To begin designing the retirement you desire contact:

Frank Wiginton CFP, RRC, FMA, CIM, FCSI, FP Canada Fellow
Retirement Designer
frank@retirementnavigator.ca
416-999-7392

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