My memory takes me back a number of years now to a gathering at a pool party in a friend’s backyard. I was part of a group of men standing together, cups in hand, chatting about the approaching retirement of a number in the group. I find that it’s in such a setting that people are enticed to let their guards down and start to verbalize “the dream”.

You’ve seen it… the way a person’s eyes shift slightly skyward as they sigh, their facial features softening with a slight smile and they are transported – albeit temporarily – to a vista somewhere just beyond the horizon and to a dream of a future yet to come.

Then, abruptly, the speaker snapped back to the here and now to his Big Question… and he looked me straight in the eye as he asked it:

“Will I be able to retire?”

That moment has had a lasting impact on how I approach my practice and serve my clients. I’ve come to revere the inquiry as one of the Big Questions of life… it’s right up there with the meaning of life and how DO they get the caramel in the Caramilk bar! (OK, an entire generation of readers has just said, “Huh??!”).

More clearly interpreted, I think the question is this: Can I retire when I want, to do what I want?

Since then, I’ve dedicated time to crystallizing a formula designed to help people with their “retirement readiness”. While I would love to have been able to, in that very moment, reply to my friend that he and his wife were indeed well positioned with an adequately funded retirement, I know that there cannot be a canned response that will honestly apply to people across the board. The truth is, it depends.

Each of us will harbour variations in our visions for retirement, and like fingerprints, there are no two exactly alike. For some, it’s the opportunity to travel and immerse themselves into bucket-list experiences. For others, it’s to leave behind the obligatory expectations of the employment world to throw themselves headlong into radical, crazy adventures that will more fully fuel their life’s quest for meaning and the fulfillment of personal purpose. And for still others of us, it’ll be that creaky swing on the veranda that will give us the elusive margin in our lives wherein we restore our souls.

Regardless of how we envision our post-employment existence, the following steps can start us on our journey to answering our BIG Question:

1. Start by quantifying your basic living expenses… by basic, I refer to essential food, clothing, shelter and transportation. This is the single most dreaded step toward retirement readiness, but it’s absolutely essential. We NEED to know how much we spend today on the necessities of life.

2. Now, consider the cost of maintaining or replacing the items that are part of #1 that will hit their expiry dates during our retirement. Included might be the cost of replacing your vehicle at a certain rate of frequency or putting a new roof on the house.

3. Emergencies hit us when we are often unprepared… that’s at least part of what makes them emergencies. Better set some funds aside in preparation for the unexpected.

4. If we hated #1, we LOVE #4! With our essentials provided for, the ability to maintain key assets assured, and a healthy sum set aside for emergencies, we can take whatever money is left (hopefully, there’s at least SOMETHING as of yet unallocated) and explore our lifestyle choices. This is where we decide whether we can start forming our travel plans or settle for oiling the creaky porch swing (if stay-cations are not your first choice).

5. No retirement readiness assessment is complete until we have addressed the End-of Life / Legacy question. Does your desire to contribute to the generations to follow burn deep within? At the very least, most of us don’t want to leave our heirs with a bill. There are also those for whom anything less than being able to leave a multi-generational legacy would be unfathomable.

Putting a pricetag on each of these steps requires some dedicated thought. Obviously, some will be able to move through all 5 stages of the Retirement Readiness Assessment being able to generously fund each stage. I daresay these will be the minority. Some will face the grim reality of having our soaring aspirations stall from the exhaustion of funds midway through the process.

On a closing note, it’s important that we understand that we have thus far considered only one-half of the equation. Each of our 5 stages or steps represents an allocation of retirement income, and we have yet to discuss matching those expenditures with your actual retirement income sources.

There is a blend of art and science that goes into the construction of a person’s retirement income. The timing, purpose and tax-efficiency of various government and employer-provided income streams may vary. Where do personal retirement assets come into the picture, and to convert them into an income streams requires some strategic planning. You will probably find the enlisting of a qualified financial advisor a very worthwhile investment.

We’ll pick up from here in next week’s installment of Retirement Readiness and the BIG Question. In the meantime, your comments are always appreciated!