If you're in your 50s, and thinking about your financial future makes you anxious, you're not alone. 70% of Canadians are worried they won't have enough money to retire1. While you can't go back in time to save more or spend less, it's not too late to get started. Even if you've been saving diligently, your 50s are a good time to assess where things are at. Financial choices you make today could have a big impact on where you are ten years from now.
Registered Retirement Income Funds (RRIFs) are one method of drawing an income from Registered Retirement Savings Plans (RRSPs) in retirement. There are a few things to consider to get the best value from your retirement savings with RRIFs.
For many Canadians, RRSP savings will be the major source of their retirement income. The main concern for most is the risk of outliving their money. Another priority for many retirees is minimizing income taxes.
Recessions, stock-market declines, housing market bubbles, joblessness and, most recently, a global pandemic have created a series of challenges for people trying to start, grow or maintain a retirement savings plan. Given this rollercoaster, it's natural to wonder if you're doing all you can to protect your retirement nest egg. Taking a “back to basics” approach can empower you and help keep your financial plan on track during uncertain economic times and beyond.
If you've been contributing to a pension or Registered Retirement Savings Plan (RRSP) and retirement or your 71st birthday is around the corner, you're required to convert that nest egg into a Registered Retirement Income Fund (RRIF). This benefits you because an RRIF allows you to withdraw savings as income while still letting you grow your investments and minimize taxes.
When it comes to flexible investment tools, there's nothing quite like a Tax-Free Savings Account (TFSA). This registered account allows you to hold not just savings but also investment equities like stocks, bonds, mutual funds and GICs. All of your investments grow tax-free in a TFSA. What's even better? You're not taxed when you make withdrawals, and you can reinvest that amount in future years.
It appears that while many Canadians faithfully invest funds into their workplace retirement plans they are somewhat lackadaisical when it comes to determining their retirement needs as well as measuring their progress towards those needs.
In a survey conducted by Ipsos Reid in February 2015*, it was found that only 50 percent of Canadians are following a financial plan and only less than half are saving regularly for their long term retirement goals.
If any good can come from an economic downturn it is that people are forced to think more seriously about their financial success strategy. Many people affected by the economic damage wrought by the recent COVID-19 pandemic will change their financial habits by cutting back on spending, reducing debt and increasing their savings. But, for many other Canadians, life will likely continue as usual where the pursuit of an optimal life style now overshadow concerns about future financial security.
If you apply on your 60th birthday, you'll get about 36% less of the age 65 monthly pension. But, if you wait until you're 70, you'll get about 42% more. Should you hold out for the higher income, or start early?
Start early and you're sure to get it. If you wait, and die before it starts, the income you could have had is lost to you and your heirs forever.
We are all familiar with the following perennial adage: “health is wealth”. Regardless of any financial circumstances you may have, optimum health allows you to enjoy long trips overseas, partake in your grandchildren’s life, physical activities such as golf as well as looking forward to your retirement years. No one wants to have to worry about the expenses that come with health problems in retirement.
The Baby Boomers are making history as the largest retirement migration ever seen. However, it's their parents who hold the most massive accumulation of wealth which is now being transfered to future generations. Estimated to be well in excess of a trillion dollars, the traditional rules of inheritance are changing.