Plan and Evaluate

If you haven’t already filled out the four “Action Planning” sections in the Lifestyle Action Plan, do it now. It will save you considerable time later when you are ready to put your retirement plan into action.

Decision Making

The whole concept of retirement planning involves making decisions of one kind or another. Some of these decisions can be quite straightforward while others are more difficult, such as deciding which alternative is best. Making decisions on major issues involves selecting the best choice based on the available facts. However, of equal importance, are your emotions or how you feel. Examining the facts and sorting out your feelings about a course of action is not the easiest thing to do.

There is no single reliable method to help you. However, there are certain things you can do to help yourself make better decisions. The process described below can help you sort out and select the alternative that best meets your needs. The time it takes to go through this process is time well spent.

Decision-Making Process

In making decisions, it’s wise to involve your family members, a spouse/partner or other people whose judgement you can trust. The more knowledge you can draw during this process, the easier it will be to arrive at sensible and practical decisions.

There are six steps to the decision-making process:

  1. Identify and define the issue
  2. Brainstorm to come up with a list of options
  3. Develop criteria on what you want to achieve
  4. Test your brainstorm list against your criteria
  5. Prioritize your remaining alternatives
  6. Do a forced choice comparison for the items that remain as possible alternatives

Example of the Decision-Making Process

Let’s assume the following:

  • You’ve decided to stay in a big city in Canada.
  • You now live in a gas-heated four-bedroom house with eat-in kitchen, dining room, living room, den, 2.5 bathrooms, basement games room, laundry room, attached garage and paved driveway. There are no major repairs or maintenance in the foreseeable future. Market value three months ago was $750,000.
  • Your last child was married three years ago and there are only two of you living in the house.

Read the following steps and then use them to work through your own decision-making process about where you will live during retirement.

Step 1: Identify and Define the Issue

What kind of home do you want to live in when you retire?

Step 2: Brainstorm List: What Are the Possible Options?

The following are some examples.

Rent Buy
  • Apartment
  • House
  • Townhouse
  • Condominium
  • Cottage
  • Bungalow
  • Townhouse
  • Condominium
  • Mobile Home/Trailer
  • Buy land (build/prefab)
  • Retirement community home
  • Duplex
  • Co-op
  • Timesharing resort
  • Farm
  • Hobby farm
  • Live aboard boat

Step 3: Develop Criteria

Needs/Musts

  • Own principal residence
  • Maximum purchase price: $450,000
  • Property taxes maximum: $2,500 per year
  • 2 bedrooms
  • Living room
  • Dining room
  • Eat-in kitchen
  • 1.5 bathrooms
  • Laundry room
  • Garage
  • Gas heating
  • No major structural repairs
  • One level (bungalow vs. cottage)
  • Area (easy access to downtown)
  • Proximity to doctors, grocery stores
  • Entertainment
  • Close to grandchildren

 

Options

  • Den
  • Paved driveway
  • Near golf course
  • Near lake
  • Vegetable/flower garden
  • Full basement

 

Step 4: Test Your Brainstorm List Against Your Criteria

The fourth step is to apply the criteria, which you developed in step 3, to the brainstorm list (in step 2) by crossing off those options that do not meet your criteria. What you’re left with on your brainstorm list are those options that generally meet your criteria. The following is an example of a brainstorm list based on the choices provided in the tables above.

Clear Choice

  • Bungalow
  • Duplex

 

Optional:

Unavailable Features

  • Buy retirement community home
  • Buy condominium
  • Co-op
  • Mobile home/trailer
  • Easy access to downtown
  • Garden
  • Full basement

The Brainstorm List has been reduced from 18 to two clear choices and four options. If you feel you can live without the unavailable features, then you can add the options to your clear choice list.

Step 5: Prioritize Your Remaining Alternatives

Clear Choice

Priority

  • Bungalow
  • Duplex
  • Very high
  • High

 

Optional

Priority

  • Buy retirement
    community home
  • Buy condominium
  • Co-op
  • Mobile home
  • Medium
  • Medium
  • Low
  • High

Step 6: Alternatives (Advantages [+], Disadvantages [-])

Considerations

A. Bungalow

B. Duplex

C. Mobile Home/Trailer

Financial

 

 

 + Affordable

 + Appreciates in value

 + Capital investment

 - Some mortgage

 + Income-producing

 + Capital investment

 + Affordable 

 - Value depreciates

 - Rent/lease on land
   (subject to increase)

Taxes

 

 

+ Low

Maintenance

+ Medium

- High

+ Low

Freedom

+ Average

- Considerable

+ Reasonable

Health concerns

+ Reasonable

- Possible problem

+ None foreseen

Relationships

+ None foreseen

- Mental/physical pressures

+ Commuting distance

Activities

+ Commuting distance

- Possible neighbour problems

+ No restrictions

Travel

+ No restrictions

- Some restrictions

+ No problem

Living space

+ No major problems

- Could be restricted

- Low

Personal privacy

+ High

- Medium

- Medium

 

Forced Choice Comparison

  • A compared with B: Choice A
  • A compared with C: Choice A
  • B compared with C: Choice C

Decision: A (Bungalow)