How
well are you prepared for your retirement?
Author:
News Canada
(NC)—Consider
what your plans are for retirement. Are you planning to travel the globe,
convert your cottage into a year-round home or downsize into a condominium?
Will you wait until you turn 65 years old or will you start your retirement
earlier? Regardless of what you decide, you need to be prepared and should
plan your retirement carefully.
Linda
Put, Certified Financial Planner (CFP™) and CIBC Imperial Service financial
adviser in Vancouver, has this advice: "The first step is to consult
a financial adviser who can help you assess your current financial position
and make specific recommendations to help you achieve your overall goals."
To get started, you should work through these questions with your financial
adviser:
•
What are my retirement goals? What kind of lifestyle do I want?
•
What sources of retirement income will I have?
•
What are my return expectations on my investments?
•
What types of investments do I hold and what changes need be made to achieve
a comfortable retirement?
•
What estate planning have I done? Is my will up to date? Are beneficiaries
designated where possible?
Review
your asset mix
You've
worked hard to build up your savings, so you'll want to make sure that the
money you've saved is invested well – this may allow you to retire a
little earlier, travel extensively once you've retired or purchase a summer
home abroad. "It's about having a retirement plan and getting your money
working for you, so that you can rest easy knowing that your goals will be
within reach. A diversified portfolio including a mix of savings and growth-oriented
investments should help you to outpace inflation and ensure you are in a
financially secure position," says Put.
Prepare
for RRSP withdrawals
If
you've been contributing to a Registered Retirement Savings Plan (RRSP),
you will have to convert it or close it by December 31 of the year in which
you turn 69. One of your options is to convert your RRSP assets into a Registered
Retirement Income Fund (RRIF).
You
can continue to take advantage of tax-sheltered growth in your RRIF, Put
explains. "The key difference between an RRSP and a RRIF is that your
RRIF will provide you with income since Canada Customs and Revenue Agency
requires that you withdraw a minimum amount from your RRIF each year, based
on your age."
Get the most from your money
Consider
these strategies to keep your savings compounding for as long as possible:
•
Ensure you contribute the maximum allowed to your RRSP each year and take
advantage of any contribution room carried forward from previous years
•
Base your RRIF withdrawal formula on the age of your spouse or common-law
partner, if he or she is younger than you
•
Delay the first withdrawal from your RRIF until the end of the year following
the year in which you convert your RRSP. This will keep your tax-sheltered
money working for you longer, before you have to withdraw any.
Understanding
your needs and knowing about your options will help you plan for a financially
comfortable retirement. So, if you are approaching retirement, or turning
69 this year, speak to a financial adviser to make sure you understand all
your options.
This
article is not applicable in Quebec.
-
News Canada
