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Creating a Financial Plan For Your Golden Years

Creating a Financial Plan For Your Golden Years

Happy pension couple with a laptop and paperwork for retirement planning, online e-commerce website or digital bank application investment. Elderly, senior people for life insurance or asset management

Retirement. It’s a dream many of us hold onto while we’re working hard to make a living. Does yours include worry-free days, traveling the world, or spending time with your family and friends? These are all wonderful goals but, if you don’t have an investment plan in place, that daydreamy bubble could burst.

Crafting a financial plan for your retirement can make the difference between comfort and financial stress in your post-career life. Let’s explore the essential elements you need to consider in order to prepare effectively and remember I’m also a financial advisor in addition to being an experienced mortgage broker so if you need help or have questions along the way, I’m always happy to assist you.

Where Do You Start When Creating A Financial Plan For Your Retirement?

First, let’s figure out the ins and outs of your retirement budget. In order to do that these are a few things to take into consideration:

  1. What items make up your retirement savings plan? Options include Registered Retirement Savings Plans (RRSPs), Tax-Free Savings Accounts (TFSAs), pension plans, savings accounts, and other investments. But, don’t forget the most significant asset – your home. It’s a substantial investment you have made which can play a crucial role in your retirement strategy.
  2. In Canada, your retirement income might include benefits from the Canada Pension Plan (CPP) or the Quebec Pension Plan (QPP), as well as the Old Age Security (OAS) or Guaranteed Income Supplement (GIS). However, you need to plan when this income will become accessible and how much you can expect to receive on a regular basis to know what your regular cash flow will look like.
  3. Understanding your future expenses is equally crucial. Have you considered inflation and its impact on your costs? Additionally, have you factored in potential health-related expenses? As we age, healthcare and personal support may become more critical. You should assess whether your retirement funds can adequately cover these.

Now, it’s time to reconcile your retirement dreams with your budget. Will your projected income be enough to sustain the lifestyle you’ve envisioned for your golden years? If not, don’t despair. It might be necessary to adjust your retirement plans to suit your financial resources or develop a plan to shift things around a bit. This could mean finding more cost-effective ways of achieving your retirement goals or making necessary lifestyle changes.

Saving For Retirement Using RSP, RRSP, and TFSA Investments…

Finding the right savings plan to suit your needs can be simple if you know the differences between each option. Using a combination of RRSPs, RSPs, and TFSAs will help diversify your contributions, decrease taxes, and could even help move up your retirement date if you’re able to increase your savings. 

  • An RSP is a Retirement Savings Plan with unlimited annual contributions and no maximum age limit. It is not a tax-free investment.
  • An RRSP is a Registered Retirement Savings Plan has an annual contribution limit with a maximum age limit of 71. It is a tax-deductible investment but will be taxed when you withdraw from it.
  • A TFSA is a tax-deferred, or tax-free, investment that has an annual contribution limit and a maximum age limit of 71. It is not tax deductible but withdrawals are tax exempt.

When You Retire & The Need For RRIFs, GICs and Annuities…

When you reach the age of 71, you will need to convert your RRSPs and TFSAs. There are 3 ways you can access these investments – RRIFs, GICs or an annuity. 

  • A RRIF is like an extension of your RRSP. While an RRSP helps you to save for retirement, an RRIF provides income during retirement through regular withdrawals. You still have the same investment options (mutual funds, ETFs, GICs) but, RRIFs have a minimum annual withdrawal amount.
  • Annuities give you guaranteed income to withdraw from your investments which are deposited with an insurance company or financial institution. This account can be shared with a spouse or beneficiary. 
  • A GIC provides a guaranteed return on your investment: you agree to lend money to a financial institution for a fixed period of time at a fixed interest rate. Generally, the longer your loan period, the better your interest rate will be. There is usually a minimum amount required.

Using Your Home To Fund Your Retirement

For most people, the largest investment they will make in their lifetime is into their home. When you retire, you can use that investment to help fund your lifestyle without having to sell. How? With a Home Equity Loan or Reverse Mortgage.

  • A HELOC lets you borrow money up to a set amount. You only pay monthly interest on the amount you’ve borrowed and rates are lower than other lines of credit. There is no schedule of payments – you pay off the loan when it’s convenient but you must make your interest payments. 
  • A reverse mortgage offers you a lump sum or a large amount upfront followed by regular scheduled cash payments. A reverse mortgage can be up to 55% of the market value of your home. You’ll pay monthly interest on the loan but you don’t have to make any payments until you sell the house or pass away.

How Can a Mortgage Broker Can Help Figure Out The Best Options For You?

If you’re ready to talk about retirement? Then now’s the time to talk to an expert financial advisor. I’m here to offer you all of the advice you need – whether it’s creating an investment account, setting up your retirement funds or finding a mortgage plan that works for you.

As an accredited mortgage broker with years of experience and being a financial advisor, I can help you develop a financial plan for your retirement that allows you to leverage your assets while aligning with your wants and needs. I’ll be happy to answer all your questions and look at all your options with you so that you’re ready to enjoy your golden years. The very first step? Setting up a free consultation with me. Call 705-315-0516 now or book an appointment with me online and let’s get started.

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