Strategic retirement planning more challenging as we age

Is it just me, or have others looked in the mirror and thought we looked OK, only to see ourselves in a photo and gulp?
It turns out our brains are sub-consciously editing our mirror image to make it more attractive.
While photos provide us with a cold dash of reality, they too can mislead. In a 2013 study in Scientific American, uncomfortably titled We are Less Beautiful Than we Think, test subjects were photographed, then shown a selection of photos, including the original and others modified to be more or less attractive. Subjects tended to identify themselves in the better-looking version.
This may also explain why most of us believe we are above average — which is of course a statistical impossibility.
If the mirror simply hides a few pounds, or smooths out a bit of facial asymmetry — such as eyes that aren’t quite level, no harm is done. But our capacity for self-delusion can cause serious damage when it comes to our financial well-being as we age.
A study recently published in Management Science found financial literacy scores decline after age 60, and financial decision-making declines significantly after age 70.
But here’s the rub: Even though we become less competent at making decisions, we are often just as confident in our capabilities.
This is especially problematic for two reasons. First, with defined pension plans disappearing, more and more of us are tasked with managing our own assets in retirement, so our diminishing capability can threaten our own financial security and affect the wealth we can leave to our children and charities.
Second, the decisions we need to make in retirement are among the most challenging we’ll ever face. When it comes to decumulation, or drawing down our assets, we must answer many complex questions. Do we take or defer our CPP? When do we start OAS? When should we convert our RRSPs to RRIFs and how quickly should we draw those RRIFs down?
Many Canadians are losing thousands of dollars of retirement income just by taking CPP too early. How much more are we losing when it comes to more complex decumulation choices?
Fred Vettese, chief actuary at human resources consulting firm Morneau Shepell, has researched this subject extensively. He believes millions of retirees are spending less than they could because of ineffective decumulation strategies.
Doug Dahmer, a retirement income specialist at Retirement Navigator, believes the challenge starts even earlier. He notes that if people don’t know how much money they need and when they need it, it’s hard for them to make optimal decisions.
The good news is that it is possible to take charge early and make every dollar of your savings count.
If you’re comfortable using a computer to file your tax return or pay your bills, you’ll be readily able to take advantage of retirement planning software to plan your spending and optimize the drawdown of your nest egg.
I personally use Retirement Navigator’s to estimate my retirement spending (full disclosure, they’ve given me a free lifetime membership). I also like Vettese’s retirement readiness software accessible for free at
For those who’d rather have a tooth drilled without anesthetic than do their own financial planning, a fee-for-service financial planner who sells their time — rather than investment products — can be invaluable. In any case, working with a credentialed adviser, either a Certified Financial Planner or Chartered Financial Analyst, will ensure you get someone who has the proper training to give you the advice you need.
If it turns out you are capable of making your own investment decisions well into your 10th decade — great. But a financial plan can be a terrific investment in your future, just in case it turns out otherwise.
Grey Matters is a weekly column by Wanda Morris, the VP of Advocacy for CARP, a 300,000 member national, non-partisan, non-profit organization that advocates for financial security, improved health-care for Canadians as we age. Missed a week? Past columns by Wanda and other key CARP contributors can be found at