Episode 14: The "Real" Five Steps to a Successful Retirement Plan

In this episode of Retirement IQ, host John Stregger explains why retirement planning often feels like assembling IKEA furniture without the instructions. He moves past generic advice to focus on the "gaps" that actually matter—like the difference between hitting a target number on a bank statement and actually having the cash flow to fund your daily life.

John explains why deciding when to start your benefits can dictate your income for the next thirty years and why you need a plan for the emotional shift from saving to spending. Join us as we explore how to turn your savings into a flexible, tax-smart income so that retirement feels like the reward you’ve actually planned for.

Transcript

John Stregger

Hey guys, welcome to another episode of Retirement IQ, where I help you simplify the complex world of retirement so you can actually feel confident about what's next. I'm your host, John Stregger, and most of the people I work with, they've done a great job saving, but as retirement gets closer, the questions start to pile up. And that's exactly what this show is here for, helping you turn those questions into a clear plan. So let's dive in. 

You know, a few weeks ago, I met a couple in their sixties. They had just retired. On paper, everything looked fine. But five minutes into the conversation, the husband, he leans forward and says, John, I think we retired too early. Not because they were running out of money, but because they didn't understand how it all fit together. And that's the gap. There are a lot of articles out there about how to build a retirement plan. In fact, one large investment firm says there are five simple steps to doing it successfully. Just five, easy peasy, right? It's funny because anyone who's actually gone through this knows that it's less like five easy steps and more like assembling Ikea furniture without any instructions. 

It's like you're done, and then suddenly you've got a bag full of extra parts. And now you're questioning all of your life choices and your relationship with Allen keys. So today I want to walk through those five steps, but more importantly, I want to show you the gaps. They don't talk about it. because the difference in between retiring and retiring well, it lives within those gaps. So let's start with step one, making sure you have enough money. Well, what does enough even really mean? For some people it's travel, it's adventure, for others it's quiet mornings and staying close to home. You can have the exact same amount of money but completely different retirements. And yet the media, they like to throw up blanket numbers. One article quotes, you need 1.7 million to retire. Well, says who? Based on what? Your life is an average. So your retirement plan shouldn't be either. 

Another common guideline is replacing 75 to 80% of your income. Now that's a fine starting point, but here's where I push back. Your first five to 10 years of retirement, those are going to be your most active retirement years. This is when you have your health, your energy and freedom. And I've seen a lot of people struggle here, not because they don't have enough money, but because they don't know how to start spending it. They literally spend decades saving and suddenly you're supposed to flip a retirement switch and start taking income. So most retirement plans, they don't fail on the math. They fail on behavior, that early phase of retirement. It shouldn't feel like you're handcuffed. If anything, you should be spending close to what you were before you retired. Maybe even a little more because retirement shouldn't feel like a demotion. It should feel like a reward. And that right there is one of the biggest gaps defining what enough really actually means for you. 

Step two, understanding your expenses. Now this is where things get interesting because when I ask people what they spend each month, I pretty much get one of two answers, either a confident guess or a nervous laugh. And the truth is most people are usually a bit off, not wildly off, but enough to matter. I remember sitting down with a client who thought he had a real solid handle on his spending. We went through everything, bank statements, credit cards, TV subscriptions, everything. About halfway through, he stopped and said, Okay. I didn't realize I was spending that much money. You know, nothing dramatic, but just a whole bunch of things adding up quietly in the background. And that's what catches people. You don't need a perfect budget, but you do need awareness because retirement isn't just about what disappears like commuting costs or, or work clothes. It's about what new costs show up, you know, travel, hobbies, helping family. Healthcare. And yeah, even in Canada, healthcare is not completely free. You're going to have dental, travel insurance, maybe some physio massage bills, all unexpected costs that are going to add up. So before you retire, take a real look at your life, because if you don't know what life costs now, it's going to be pretty hard to design what it'll cost later. 

Step three, understand your benefits. So this is where small decisions finally become big ones. A lot of people assume, Hey, if I retire early, I'm going to take my CPP early. Hey, it sounds logical, but it's often not because you're not making a decision for the next couple of years. You're making a choice for the next three decades of your life. And when you take CPP early, that usually means taking that reduced amount for the rest of your life. That's not just a choice, it's a permanent pay cut. Or it could be a permanent raise if you choose to delay or take CPP later. The same goes for pensions. Retire a little early and you can lock in a reduced amount for life. And once that decision is made, there's no going back. In retirement planning, timing isn't just important, it's everything. And this is just another place where the gap shows up between what feels right and what actually works long-term. 

Step four, deal with your debt. Now, ideally, you enter retirement debt-free, but real life doesn't always work that way. Having a mortgage in retirement, it's not ideal, but also not a deal breaker. If your cashflow supports it, it can absolutely work. But high interest debt and credit cards, that's where things get risky. Because in retirement, you lose one major advantage, and that's time. You're no longer in your peak earning years. So if there's one thing to clean up before retirement, it's expensive debt. Remember debt in retirement, doesn't just cost you money. It costs you flexibility. And that's often what pulls people out of retirement and back into the work world. Step five, set up your savings properly. Now this is a big one. And it's also where most people get are a little bit late to the party. So what is the ideal time to really dial this in? I'd say about five to 10 years before retirement. That's your runway. Because retirement isn't just about how much you have, it's about how you turn your pile of money into an income. 

Let me give you a simple example. Two people, they retire with $800,000. Same number, same starting point, but completely different setups. Person A, they've got everything in one bucket of money. It's all taxable when they withdraw it. Person B, they have multiple buckets, a taxable bucket, a tax-free bucket, and a low tax bucket. Now, fast forward into retirement. Person A, they're pulling all of their income from one place, and every dollar is fully taxable. They have no flexibility, no control. Person B, they've got some options. They can choose where to pull from, when to pull, how much tax to trigger. Same amount of money, two completely different outcomes. And over 20 or 30 years, that difference can add up significantly, but this isn't just about saving tax. It's about control because retirement is one of the first times in your life where your income isn't fixed. You're not on a salary. You actually get to design it, or at least you can, if you set things up properly ahead of time. I've seen people come in a year before retirement. And at that point, we're mostly working with what's already there. Now we can improve things, but we're limited. 

Compare that to someone who comes in seven or eight years out. Now we can really build something special. We can shift, rebalance, plan ahead. That's the difference between reacting and designing. And this is where the gap really shows up. between having money and having control over it. So yeah, there are five steps, but behind each one, there are dozens, if not hundreds of choices. And getting those decisions right, that's what turns retirement from something you hope works into a lifestyle you actually enjoy. 

So if there's one takeaway from today, it's this. Don't build your retirement plan around someone else's numbers. Build it around your life. So that wraps up this episode of Retirement IQ. If you're within a few years of retirement and you're starting to feel that mix of excitement and uncertainty, you're not alone. The good news is you don't have to figure it out all by yourself. If you're looking for clarity on where you stand and what comes next, visit us at freeretirementreport.ca. We would love to help. Until next time, I'm John Stregger. Thanks for listening and bye for now.

Female Narrator:

The information provided in this podcast is general in nature and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax, or other professional advisors.