retirement planning

Retirement Investing Approaches

After spending likely 30 – 40 years focussed on building an investment portfolio, it can be quite a challenge to switch gears when it comes time to withdrawing income from a retirement portfolio. This change leads to new ways of looking at investing as well as re-assessing habits that have been honed over decades.

Many retirees looking to generate income from investment assets often think that they can make withdrawals from their investment portfolio while also continuing to grow the assets over time. This is generally a tough goal to achieve.

What You Don't Know Could Cost You

The age old saying, 'Ignorance is bliss', may apply to many things in life. However, when it comes to your finances, ignorance can be absolutely devastating. Even the government is calling the startling low rate of financial literacy among Canadians an epidemic that can have catastrophic consequences for the nation's economic future.

A lack of knowledge on even the most basic financial matters has already led to a cascade of calamities that will have a far-reaching and long lasting affect on all of us. Among them:

Registered Retirement Income Funds

It is required by the Income Tax Act that a Registered Retirement Savings Plan (RRSP) must be closed by the end of the year in which the planholder (annuitant) reaches age 71. At that time, the annuitant must decide what to do with their retirement savings. They have three options - cash in the RRSP, buy an annuity, or convert to a Registered Retirement Income Fund (RRIF).

Should You Move in Retirement?

Many people look forward to retiring, and going to live beside a golf course, on the coast, or somewhere else where they have always dreamt of. It's enticing to think that your leisure time can be spent pursuing activities you have worked and longed for all your life. In fact, whole retirement communities are set up on the premise people want to relocate to such a scenario to live out the rest of their lives.

How Much Will I Need to Retire?

Good question. Many retirement income planning tools use a percentage of income to determine an income need in retirement and then calculate an amount needed to provide that income. People with similar incomes often have different spending and lifestyle habits. This can affect their income needs in retirement.

It is still important to calculate what the income needs will be in retirement. Arriving at the right percentage of income to replace may require a little more work.

Late Career Retirement

A few years ago, when the federal government restored the OAS eligibility age back to 65, many Canadians breathed a sigh of relief. When eligibility changes were originally implemented they only affected those under age 54 as of March 31, 2012, but it became apparent that even an extra few hundred dollars a month in retirement could mean a lot to many future Canadian retirees.

Estimating Retirement Expenses

By far one of the most crucial financial strategy steps is accurately estimating retirement expenses. Correctly accounting for retirement living expenses is critical to ensuring that retirees do not outlive their money. For those already retired, there are usually few good options for creating new income sources later in life.

Getting retirement spending projections correct is both an art and a science. To deal effectively in planning for future retirement needs, a financial professional can help determine the best course of action.

Debt Reduction as a Retirement Savings Strategy

Statistics Canada recently reported the ratio of household credit market debt to disposable income reached the highest level since the agency began tracking this figure. In 1990 it was 50%, rose to 110% in 2000 and jumped to 171% by the fourth quarter of 2017. This can cause some angst for those with children reaching post-secondary school age.

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