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Top Financial Retirement Tips for Canadians

Tip #1: Do a bit of planning

Are you planning to work part time into retirement? Do you have a company sponsored pension? Are you staying in your home? Are you planning to become a snowbird? These days, people’s retirement dreams are all over the map. Now would be an excellent time to sit with a Financial Advisor and put all of your financial resources and your retirement goals on the table and make sure they all match up. A few easy adjustments often make the difference between financial stress and financial security during retirement.

Tip #2: Prepare a “retirement budget”

Most Advisors will tell you that retirement is less expensive than your working years. No more commuting to work and lunch at the office. No more expensive business outfits. Take that dream vacation when the prices are low rather than trying to have it during the holiday break with everyone else. Shop the sales since you have the time. Go to the movies on Tuesday and get a deal!

As a rule of thumb, many Advisors suggest that you’ll spend 70% of what you used to spend while you are working. But crunch the numbers yourself. If you are planning to be a snowbird and winter in Arizona or Florida, your numbers might be very different.

For more on how much you need in retirement, see our site.

Tip #3: Pay off your debts (if possible)

While we’d always say this is a good idea, since your income will drop significantly in retirement, now is a good time to get rid of all your debts. The money you were spending on interest can now be saved or used to finance your retirement lifestyle. Even what we’d call “reasonable debt” (mortgages) no longer makes sense in the retirement years if you can afford to eliminate it.

Tip #4: Maximize your investments (if possible)

Just because you are retired doesn’t mean you can’t contribute to Registered Retirement Savings Plans (RRSP) and Tax-Free Savings Accounts (TFSA). Of course, at a certain age (currently 71), you have to start drawing down your RRSP but until that time you can still get the tax savings by contributing.

Tip #5: Don’t make any big financial decisions immediately after retiring.

This tip applies to any big change in your life (first job, first child, children moving out, divorce, etc). It is tempting to want to quickly act on the ideas that have been brewing for a few years but people often find the realities of retirement are different from what they expected. Many people find themselves working after they “retire”. Others find that that 70% of pre-retirement spend rule of thumb doesn’t apply to them. Take a little time and make sure you know your earning and spending patterns in retirement before you make any big moves. A Financial Advisor can help with this.

Tip #6 Figure out how much you’ll get from Government Programs

For most of us, Old Age Security (OAS), Canada Pension Plan (CPP)/Quebec Pension Plan (QPP) and the Guaranteed Income Supplement (GIS) all pay out less than we’d hope considering the amount of time we’ve paid into the program. Do your research and make sure you know how to expect to supplement your savings in retirement. We have resources on our site to help.

How much will I get from Government Programs?

Tip #7 Get Professional Advice

While you can navigate retirement by yourself and we certainly want to give you the tools and knowledge to do that, this is a time in your life where many things are going to change and there are many financial variables at plan. Getting a little support from a Financial Advisor can yield big dividends.

Get help here.

Also, check out our page dedicated to Financial Tips in Retirement.

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