I ran into "Larry" the lifeguard not long ago - literally.
He was doing his daily workout run from Capilano River along the water to the Dundarave pier and back.
He's in great physical shape, 40-ish and single. He works as a lifeguard here in the summer and every winter heads to Hawaii and Fiji to teach swimming and surfing.
"It's a good life," he said, "but I don't have any savings. I'm not quite sure what I'll do when I get too old for all this."
Larry was beginning to get twinges of pre-retirement financial stress, defined by Pat McKeough, editor and publisher of The Successful Investor and three other investment advisories, as: "The malady that strikes when it dawns on you that you won't have enough money saved to earn the retirement income you were banking on."
But don't stress, I told Larry. "If you don't think you'll have enough money for retirement, you always have three choices - any or all of the following:
(1) Spend less now (or increase your income) so you can save/invest more.
(2) Plan to work longer and retire later.
(3) Lower your standard of living in retirement to match your after-tax income."
For most people, (2) is the default choice, health willing, followed by (3). Although (1) is mostly about living on less now (or generating more income) to have more to live on later, if people haven't been able to do that so far they might find it hard to start now.
The usual suggestions can help: Pack a lunch most days instead of eating out. Cut back on fast food and processed food. Stop smoking, reduce drinking, take cheaper holidays, manage with one (or no) car, move to cheaper accommodation; get a second job or start a self-employed sideline.
Just make sure every payday the saved money is automatically transferred to your retirement investment program - in most cases maximizing RRSPs and possibly TFSAs (Google "TFSA vs. RRSP calculator" to compare the two approaches).
Mike Grenby is a columnist and independent personal financial advisor; he'll answer questions in this column as space allows but cannot reply personally. Email [email protected].
