Getting close to retirement? Don’t wait until the last minute to put your finances in order. Give yourself plenty of time to prepare.
Transitioning from working life to retirement takes careful financial planning and decision-making. Here are some smart tips on what you can do ahead of time.
1. Convert Your Savings to Income
Research your income options and set up a plan so you have an income from the first day you retire. Options include RRIFs, TFSAs, annuities and unsheltered savings.
You may want to speak with your Financial Advisor to help you set a plan in motion to meet your income needs once you are in retirement. It may also be good time to review your investment goals and make any adjustments accordingly.
2. Apply for Government Benefits
Don’t wait until the last minute to apply for government benefits – it may mean a delay in getting your payments. For example, you should apply for CPP 9 months before you retire in order to receive your payments in time.
3. Pay Off Your Debts
Pay off your debts as soon as you can – ideally before you retire. To help you pay down debt faster, make sure you are paying the lowest interest rate.
FACT: According to Statistics Canada, 1 in 3 retirees hold some form of debt.
4. Calculate Your Monthly Income
Use an income calculator to estimate how much monthly income you’ll receive from your savings, investments, government benefits and any pensions.
5. Make a Budget
Figure out how much you’ll need to spend to make ends meet in retirement – then see if it matches your monthly income. If it doesn’t, you’ll need to find ways to save more, cut spending, or boost your income in retirement.
6. Review Your Insurance Needs
As you get older, your insurance needs will likely change. For example, if you have fewer debts and dependents, you may not need as much life insurance coverage. But you might have more health problems, so you may want to consider critical illness insurance or long-term care insurance. It is always best to consult your Financial Advisor to learn about what options work best for your specific situation.
7. Review Your Will and Establish Powers of Attorney
If you’re about to retire, your Will might need to be changed or updated. Having a valid, up-to-date Will is essential to ensuring your estate is distributed as you intend, and that your death does not create a legal and administrative burden to your family. If you die intestate (without a valid will), a court will appoint someone to administer your estate and distribute the assets according to a formula set out according to provincial estate and family laws.
You should also make sure you have designated a Power of Attorney. This is a legal document where you name someone to make financial and other decisions for you if and when you can’t make them yourself. Choose someone you trust, who knows you, and will carry out your wishes with sensitivity and tact.
