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On the Money

DAVID TRAHAIR What Are You Doing After Work? T

HINK AHEAD A FEW YEARS. You’ve just punched the clock for the last time. You’re on your own now — no more work. Total freedom, right? Well, it depends on how well

you’ve set yourself up for this period of your life. Money is obviously important, but nonmonetary issues are

also key. It’s vital that you plan ahead by figuring out what you are

going to do each day, and then assess the financial implications. In my career as a speaker on retirement matters, I have the opportunity to meet some very interesting people. One retiree I talked to, Hans, put it best. He said aſter you finish work you will have to fill about 1,800 hours a year that you previously didn’t have to think about. That’s 35 hours each and every week. What are the activities that are going to get you out of bed in

the morning? We humans need something to do. Lazing on the couch eating junk food while watching TV sounds like fun, but aſter a few months you’ll probably end up with severe weight and cardiovascular problems. Now let’s examine the monetary side of things. If you plan on

working at least part time, that can take pressure off having to stash away a sizable nest egg. Want to go on a nice cruise? Put in a few more weeks of work and maybe you can pay for it. Andy Rooney, the curmudgeonly CBS reporter, had his last

regular appearance on 60 Minutes on October 2, 2011. He died a month later, on November 4, at the age of 92 from complications suffered aſter surgery. He enjoyed his work so much he never wanted to retire, and the fact that he was earning money practi- cally up until the day he died meant he didn’t have to save much to finance his later years. But what about you? Perhaps you don’t want to work and are

happy being around friends and family and puttering in your garden. Those activities won’t be a source of money, but they won’t cost you a lot either. But if you plan to stop working altogether and still want to

travel the world or indulge in expensive hobbies, you’d better make sure you save enough money to finance it all. For example, say you want to go on extended vacations every

year for five years aſter you retire and you don’t want to engage in any part-time work to help finance your travels. How much larger will your RRSP have to be compared to that of someone who worked part time to pay for the trips or someone who prefers the garden? Let’s assume, for example, that your travels will cost $20,000 a year for you and your companion. Do that for five years and it’s

$100,000. To finance that out of your RRSP, remember you would first have to pay tax on the withdrawal. Assuming you are in a 31% marginal tax bracket (with taxable income between $44,702 and $72,064 in Ontario in 2015), you would have to with- draw $28,986 from your RRSP each year for five years. If your RRSP made an annual return of 4% a year, it would need to be $129,041 at the start of your retirement. To build an RRSP that large you’d have to save $10,748 per year for 10 years, assuming a 4% annual rate of return. So here’s my plan. I’m hoping to work part time doing the

things I enjoy, such as giving personal finance seminars based on my books. This will fill up perhaps a couple of days a week during the training seasons in the fall, winter and spring. As

If you plan to travel the world or indulge in expensive hobbies, you’d better make sure you save enough money

I age I’ll probably do more on-demand courses that I can record at my leisure rather than travel to give in-class sessions. I hope to keep up with the business and other news of the day

by reading the paper every day. This should help keep my mind active and give me the knowledge to partake in interesting dis- cussions with my friends and to update my course materials. I also plan to exercise for an hour or two a day. I also hope to embrace my favourite hobby — photography.

Specifically I love to photograph professional sports. I already have a website set up as an outlet for my photos (check it out at My plan is to combine vacations with my passion. I can’t wait to take trips where I can also cover events such as the US Open tennis championships, Wimbledon and maybe even the Monaco Grand Prix. Thinking about what you’d like to do when you retire is

a worthy investment of your time. In fact, the quality of your retirement life depends on it. So, what’s your plan?

David Trahair, CPA, CA, is a personal finance author and speaker ( His latest book is The Procrastinator’s Guide to Retirement


Photo: Jaime Hogge

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