Navigating through the ‘decision decade’

God, Money and Me

October 26, 2011 | Viewpoints | Volume 15 Issue 21
Harold Penner |
Harold Penner

As people move closer to the magic age of 65 that society has deemed the age of retirement, they may find themselves wondering if they are ready for the transition.

They may question whether they have set aside enough money for retirement and what their expenses may be as they transition into retirement mode. They listen to, and read reports about, the financial requirements of retirement, listen to stories of those who retired ahead of them, and worry about what their days may be like or how their retirement will compare to the commercials portraying leisure retirement living on a southern beach or golf course.

Some refer to the five years prior to and the five years immediately following retirement as the “decision decade.” They suggest people focus beyond savings rates and investment returns to another factor which may have a greater impact on their ability to enjoy a positive retirement. That factor is the lifestyle adjustments people may make leading up to the golden handshake.

For most Canadians, the five years from age 60 to 65 are typically the years of greatest disposable income. These are the years of highest income combined with paid-off mortgages and their children having moved out of their homes, allowing them a greater sense of freedom, both financial and social. They will have the time and money to get out with friends, and to travel or explore other interests they would not have participated in earlier. This can be a helpful opportunity to test different options to determine what they would like to do with their coming retirement freedom.

However, it is helpful to heed a caution as well. The money they spend in the five years preceding and immediately following retirement is not going towards their retirement savings, which means they will not have it available to produce earnings on which to live. If they are not careful, they may find they have escalated their lifestyle expenses and reduced the available savings for funding that lifestyle. The result may be a sudden drop in lifestyle shortly after retirement because they have depleted their resources too quickly and the lifestyle they had planned to enjoy is no longer available to them.

Those who speak about the “decision decade” suggest that the more prudent option for pre-retirees is to take a pre-emptive look at their available finances with a view to maintaining the lifestyle they had throughout their lives and budgeting their retirement spending to match their expected lifestyle. If those reserves are not very high, they may choose to transition to a new work arrangement that allows them to retain a smaller income stream while still providing some time for flexible lifestyle choices. With a little planning, retirees can experience faithful joyful living throughout their lives.

Harold Penner is a stewardship consultant at the Winnipeg, Man., office of the Mennonite Foundation of Canada (MFC). For stewardship education and estate and charitable gift planning, contact your nearest MFC office or visit

Harold Penner

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