Your personal savings are just one part of a retirement income plan that can include government benefits and a workplace pension
It’s important to know how all of your investments and savings behave when you begin to draw on them for income in retirement
Ensuring your personal savings are part of a sustainable retirement income plan requires planning, discipline and expert advice
Don’t discount creative ways you can supplement your personal savings for income in retirement
Saving enough for retirement
Have you saved enough for retirement? It depends. The amount you’ll need in your personal savings for retirement will depend on a number of factors. Some things to consider include:
Do you have a workplace pension?
Depending on the specifics of your company’s plan, a pension could be a key part of your retirement income
What is the cost of living like where you’re planning to retire?
Daily expenses – food, housing, activities and services – can be significantly lower outside of major city centres, and some retirees even choose to move abroad for this reason.
Will you still be supporting any dependents?
As you head into retirement, you may still have adult children looking to you for financial assistance, or even elderly parents who may need your help.
Is there any debt you’ll be carrying into retirement?
If you have a mortgage or other debt (and most Canadians do) factor in the payments within your budget.
How are you going to fill your time?
Many of us plan to spend our retirement pursuing the passions or interests we didn’t have time for during our working lives. Remember to factor in the cost – like a golf club membership, perhaps, or art supplies and lessons if you’re taking up painting – when you’re budgeting.
Are you planning to travel?
Whether it’s the occasional cruise or spending every winter down south, make sure you factor this added expense into your planning.
Do you own a home that’s appreciated in value since you bought it?
Often your biggest asset, your home can be a source of income during retirement, whether you sell or choose to stay and find creative ways to utilise its value. On the flip side, you might be planning to make some long-awaited renovations, which will be an additional cost.
Do you have a spouse or partner?
If so, do they have a workplace pension? What kind of life insurance do you have? Is it a separate or a combined plan? What are their savings, and will you pool your assets, or just share expenses? This is also an important time to think about estate planning.
How’s your health?
Down the road, you may begin to require extra care – like a home healthcare aide, for example, or accessibility updates to your home – and you may also need to transition to a retirement home or long term care facility. Health insurance can also become more expensive as you age or your health changes.
Are you planning to work in retirement? Which government benefits are you eligible for? And when should you take them?
All of these variables mean that your “ideal” personal retirement income plan will be unique to your circumstances. Working with a financial security advisor can help you figure out what’s right for your retirement, and plan accordingly.
Pacing your spending, budgeting conservatively and exploring ways to continue growing your savings in retirement are steps you can take to make this prospect less daunting.
By the time you turn 71, you must either purchase an annuity or convert your RRSP to a registered retirement investment fund (RRIF).
Now that you’ve explored some of the ways that your personal savings can become a part of your retirement income plan, why not:
See how government benefits can help to supplement your income in retirement, and understand what you might be entitled to
If you have a workplace pension, learn more about how they work in retirement
Set aside time to meet with your advisor to create a sustainable plan for the retirement you’ve worked so hard for.