What to do before you retire

The final months before retirement are a crucial time to determine how much money you have and finalize a withdrawal strategy to ensure it lasts.

Budgeting for current and future expenses will help you come up with an effective withdrawal plan.

For many, the 4% rule is a decent guideline. This entails withdrawing 4% of your retirement savings in the first year, then adjusting the amount for inflation in subsequent years. (However, due to the current rate of inflation and cost of living, that number has recently dropped to 3.7%.)

Depending on your portfolio, this strategy should ensure that your retirement savings last 30 years or so.

If you’ve invested in a workplace pension plan, look at your individual benefit statement to find out how much you'll receive each month. Married couples may have different choices if an employer offers spousal benefits.

Depending on your age, you may also qualify for the Canadian Pension Plan (CPP) or Old Age Security Pension (OAS). The monthly benefit you’ll receive is based on your earnings and contributions throughout your working life.

The Government of Canada website offers an online tool to calculate your retirement income. This includes CPP and the OAS.

When budgeting for retirement, keep in mind that you may not spend money the way you did while you were working — maybe you’re close to paying off your mortgage, leaving you with extra funds or perhaps you want to travel more, increasing your travel costs.

Don’t forget to budget for the long term as well, factoring in things like home renovations to help you age in place or the funds you might spend on health care down the road. Without the healthcare benefits that came with your job, you might need to look into alternative coverage.

In the course of this budgeting process, you may discover that you don’t have enough money to sustain you in retirement. If that’s the case, consider boosting your income by continuing to work (e,g., part-time job), downsizing your home (to cash in on equity and save on housing costs) or selling a car you don’t need anymore.

Unexpected vet bills don’t have to break the bank

Spot Pet Insurance offers coverage for treatment of accidents, illnesses, prescriptions drugs, emergency care and more.

Plus, their preventative care plan covers things like routine check-ups, microchip implantation, and vaccinations, if you want to give your pet the all-star treatment while you protect your bank account.

Get A Quote

How to ensure a smooth transition

Finances are just one part of your retirement plan. Creating a sense of routine and purpose can help you ease into your new lifestyle, and prevent anxiety and stress.

For example, you can establish a morning routine that incorporates a daily walk and logging into an online writing class. Or volunteer at an animal shelter a few times a week, leaving other days free for relaxing activities like reading or sitting by the beach.

Staying socially engaged is crucial, as 39% of Canadians age 65 or older reported feeling lonely at least some of the time, according to a report by the Women’s College Hospital Research Institute.

With your budget set, and a daily routine filled with purpose and pleasure, any retirement jitters you have will be replaced with a sense of opportunity in this next stage of your life.

Sources

1. Government of Canada: Canadian Retirement Income Calculator

2. Women’s College Hospital: Loneliness epidemic among older adults in Canada

Sponsored

Trade Smarter, Today

Build your own investment portfolio with the CIBC Investor's Edge online and mobile trading platform and enjoy low commissions. Get started today!

Sarah Li-Cain, AFC Freelance Contributor

Sarah Li-Cain, AFC is a finance and small business writer with over a decade of experience.

Disclaimer

The content provided on Money.ca is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter. Advertisers are not responsible for the content of this site, including any editorials or reviews that may appear on this site. For complete and current information on any advertiser product, please visit their website.

†Terms and Conditions apply.