Whether retirement is soon or years away, do you know if you’ll be able to live your life the way you’d like?
Your retirement is about so much more than ending a career. It’s about starting something new and making the most of the opportunities ahead. Follow these six tips to make the most of your retirement.
Look at your financial forecast
Review your retirement savings including: pension plans, savings accounts, non-registered investment accounts and registered investments.
Additional income sources
Are you eligible for other sources of retirement income, such as the Canada/Quebec Pension Plan, Old Age Security or Guaranteed Income Supplement? Calculate what you can expect and when.
Check that you’re on target
Draft a budget of your estimated retirement expenses, remembering to adjust for inflation. Compare this figure against the totals from your financial forecast and additional income sources.
Review your investments
Does your investment portfolio reflect your current stage in life? Check with your advisor to make sure your portfolio is on course for meeting your retirement goals.
Mark your 71st birthday
Make sure you convert your registered savings by the end of the year you turn 71 or you may experience tax implications.
Will your income be enough?
If you’re worried about outliving your savings, consider supplementing any government or employer pensions with investments that can provide additional sources of income once you retire.
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Registered retirement savings plan (RRSP)
Shelter your retirement savings from taxes
If you’re saving for retirement, you want your money to grow steadily and reliably so you know you’ll have enough to live day-to-day and enjoy life when you have more time on your hands. Your contribution to an RRSP is tax-deductible, up to your deduction limit, so you save on taxes each year you contribute.
An RRSP also helps you reach your financial goals for your retirement efficiently because you don’t pay tax every year on the growth of your investments. Instead, the money you would have paid in taxes continues to grow inside the plan. You do have to pay taxes on the amount of any withdrawal. Accelerate your retirement savings with these RRSP strategies:
- Start early—you can open an RRSP at any age if you earn an income and file a tax return; the longer your investments enjoy tax-deferred growth, the better for you
- Set up regular contributions—you can even apply to reduce the taxes your employer deducts from every paycheque and contribute your extra paycheque income to your RRSP
- Catch up to your personal contribution limit—you can find your personal contribution limit on your most recent Notice of Assessment, or you can check the CRA site for more options. Consider contributing your tax refund, bonuses and other windfalls, or taking out an RRSP loan* that you pay back as soon as you receive the tax refund for your contribution.
* Borrowing to invest in an RRSP may not be appropriate for everyone. You will need the financial resources to meet your loan obligations in full. Talk to your advisor to find out more about the advantages and obligations of borrowing to invest.