Living in Retirement

We’ve just finished the RRSP season when many Canadians make a last-minute contribution to beat the deadline for a deduction on their 2019 income taxes.

With low interest rates, fewer defined benefit pension plans and longer life expectancies, more people than ever are concerned about outliving their savings in retirement. In fact, surveys indicate running out of money is the biggest fear of seniors, with some studies finding that many people consider it a fate worse than death itself.

Does accelerating withdrawals from registered retirement plans reduce taxes? Prompted by the recent death of a friend, a client asked what they could to avoid a large tax bill from their registered savings when they died.

Old Age Security, commonly referred to as OAS, provided a base level of retirement income to over 6 million Canadians in January 2019. I outline how OAS works and how to determine the amount you will be eligible for.

A better way to convert savings into retirement income. The defined benefit pension plan, a traditional mainstay of retirement planning, is on its way to extinction.

As soon as I’m put in charge of simplifying all our financial jargon, one of the first ones I’d like to take on is Monte Carlo Simulation. Or it’s sometimes called Monte Carlo Analysis.

So … you’re thinking about retiring. Someday, anyway. To prepare, you’ve been saving to your Registered Retirement Savings Plan (RRSP) and your Tax-Free Savings Account (TFSA). Maybe you’ve got a pension at work, and have been calculating what to expect from the government.

The usual rule of thumb that people use to plan how to fund their retirement is to withdraw 4% a year from their pool of savings.

The choices seem endless. Downsize to a condo, move to warmer climes, split your time in two or more places, be a ski bum, or beach bunny, or live in an RV and hit the road? It’s a big decision, and potentially expensive if its the wrong one. How do you choose?

Retirees have opportunities to influence both the amount that can be sustainably withdrawn from their investments and the timing of those withdrawals.