A 2016 survey of Canadians over 65 showed their average living expenses are around $60,000 a year. Averages don’t always tell the full story. You’ll need more if you plan to travel to exotic locations and live in a low-maintenance, high-end condo. You may need less if you want to stay in your current home and babysit the grandchildren.
No matter how old you are, it’s time to talk to a good financial adviser about your plans. When you’re a few years from your ideal retirement age, take these simple steps to ensure your bank account is ready for you to retire:
#1 - Decide if you’ll work part-time
Even if you don’t need the income, remember that work can boost your mental well-being. The best part of working during retirement is that you can choose something you love instead of worrying about the size of the paycheck so much.
#2 - Take care of major, predictable expenses early
If you know you’ll need to replace big-ticket items—a roof, appliances, or vehicle, for example—it’s easier to budget for those expenses while you’re still working.
#3 - Create a written retirement budget
Keep in mind that some of your expenses may shrink (you likely won’t need dry cleaning services as often, for example) while others may grow (travel expenses may rise). Try to live on the budget for a month or two so you can test if it’s realistic. If it doesn’t work, then adjust it now and consider if you should work a few more years or pick up a part-time job.
#4 - Do your expat research
If you’re thinking about traveling (or living) outside of Canada for long periods of time, then research the tax, pension, and insurance implications. Good planning with the help of a financial adviser now spares you from unfortunate surprises later.
#5 - Decide when to apply for public pension benefits
Most of us are eligible to receive money from Old Age Security (OAS), the Canada Pension Plan (CPP), the Quebec Pension Plan (QPP), or the Guaranteed Income Supplement (GIS). In each case, the age at which you apply affects how much you receive, so talk to a qualified adviser before applying.
#6 - Review your insurance and make needed changes
Review your insurance policies to make sure they are going to still be adequate as your lifestyle and needs change during retirement. Adjust accordingly to be sure that you are well-covered in this area.
#7 - Review your will
What you set up at 40 years old may not necessarily reflect your current desires. Review it to be sure that it is updated to include all major assets and instructions that you may have now. If you don’t have a will in place yet, now is the time to get an appointment with an attorney and create one. I promise the process is not as daunting as you think.
#8 - Talk to an adviser about your post-retirement taxes
Some seniors qualify for tax credits, while others may not. Pension income splitting or sharing might minimize your tax burden and be a substantial money saver when executed correctly. By discussing these things now, it will make it easier to create an executable plan when you decide to take distributions or payments.
A Happy Ending
Clint and Carey had reached an age where their children were grown, their home was completely paid for, and they were both within a few years of retirement from their places of employment. They both had saved for this most of their lives. But were they really ready?
At the recommendation of an old college friend, they decided to schedule an appointment with CleveDoesMore to review their retirement plans and strategies. After only a short session, they were able to identify some key areas that they hadn’t even considered yet and begin moving towards resolutions for these areas now.
Now, as their final day of traditional work approaches, they can breathe easy knowing that they are truly ready to step into their retirement years with confidence.
Start Early, Finish Strong
The bottom line is that there is much to consider as you approach retirement. The earlier you start, the easier it is to reach your goals. Even if you’re nearing the traditional retirement age, it’s not too late to start considering your options and getting plans in place.
At CleveDoesMore, we help people of all ages create retirement plans that are strategic and specific to their goals and dreams. When you meet with us, we’ll show you how to identify areas that need to be focused on now in order to be ready for your golden years.