Part 2: The Art & Science of Retirement Planning

Doug Nelson is author of the newly released Master Your Retirement and discusses the "laws" of retirement planning.

There are certain “laws” that impact our lives each and every day: from the simple household laws (i.e. taking out the garbage), to the scientific (i.e., the law of gravity), to societal laws that are set to maintain order and to hopefully treat all citizens equally. Without these laws, we would have chaos.

So what are the key laws that we need to follow in retirement planning?

There are 5 Key Principles and 20 Critical Rules outlined in Master Your Retirement to follow, year in and year out that will enhance your odds of success. To put these laws into context, the math equation X = 5 + 2 X 10 – 1 X 100 needs to be broken down into meaningful parts so that you can calculate the answer to the question properly. To do so, we follow the law of the “order of operations” and achieve an answer of -75. By breaking down this math problem into smaller pieces following the laws of mathematics, the problem becomes very simple to solve. This same is true for retirement planning. This is the “science”.

More specifically, the best way to break down the components of the retirement plan is to consider the following areas:

1. Identify your basic income needs.
2. Identify your lifestyle wants.
3. Identify the costs of owning vacation properties.
4. Identify the profit and loss picture on rental properties.
5. Identify the guaranteed sources of income.
6. Identify the variable sources of income.
7. Identify the ideal timing for each source of income.

Next week, we'll look deeper into the questions you should ask yourself when considering each of the seven retirement plan components.

LAST TIME: The Art & Science of Retirement Planning

Pick up your copy of Master Your Retirement from the Knowledge Bureau Bookstore.

Doug is a 21-year veteran of the financial services industry in Canada and is a senior financial planner and licensed portfolio manager. He has authored several advanced financial planning courses with Knowledge Bureau.