So many money questions
Will you have enough for your needs and wants?
Where will the money come from?
Retirement income from your workplace
If you have a pension plan at work, find out what your pension payments will be by reviewing your last pension statement or talking to your employer. Link will open in the same window
Personal savings and other sources of income
You may have RRSPs, TFSAs and investments that you'll turn into retirement income. Know your options. Link will open in a new window or tab
And don't forget other types of income you might have, like:
- Rental income;
- Work income (part-time, consulting, etc.);
- Assets that you sell to create income (e.g. sale of a business, a second property); or
- An inheritance.
Where will the money go?
In retirement, some of your expenses are likely to change, while others may stay the same. Expenses fall into what you need (essential expenses) and what you want (discretionary expenses). Here are some things to consider about your expenses.
What are your needs (the essentials)?
- Housing (including mortgage/rent, utilities, property taxes, repairs, monthly fees if you're in a condo, housekeeper, lawn service, snow removal service, etc.);
- Food;
- Transportation (car payments and maintenance, gasoline, public transit, parking fees, etc.);
- Insurance (house, car, life, health, long-term care insurance, etc.);
- Out-of-pocket health expenses (co-pay fees for prescriptions, non-prescription medicines, eyeglasses, dental expenses, physio, etc.);
- Debt repayment (mortgage, credit card and other debts);
- Personal care (clothing, toiletries, etc.); and
- Emergency fund (if you don't already have one).
What are your wants (flexible or discretionary expenses)?
- Entertainment;
- Social or recreational memberships and expenses;
- Personal care (the extras);
- Vacations;
- Home improvements;
- Second residence (e.g., cottage, time-share);
- Education (do you plan to take courses or get a degree?);
- Charitable donations; and
- Gifts.
Will your income fall short?
Here are some things to consider:
- Rethink your spending. Take a close look at your expected expenses. Remember that items like gas, parking or transportation costs will likely go down. Your clothing and entertainment needs may also change. Be realistic about what you want versus what you really need and see how you can compromise.
- Keep working. If you can, consider delaying your retirement start date. Another option may be to work part time after you retire. Chances are you've gained valuable skills and knowledge over the years that can be applied in many different working environments.
- If you own your home, consider downsizing, and look into the cost of renting versus owning your home.
- Another option on the home front is to take equity from your home through a line of credit or reverse mortgage. A financial advisor can help you understand your options here.
- See if you qualify for the Guaranteed Income Supplement Link will open in the same window from the government.
How can a financial advisor help?
If you've never used a financial advisor, now's a good time. The decisions you make now can affect you for the rest of your life.
An advisor can help you with the financial decisions you need to make as you enter retirement, like:
- How will you take your pension income?
- Will you convert other assets to income?
- Are you making tax-efficient investment decisions?
- What estate planning decision do you need to make?
- And more
For more information on financial advisors, check out:
- The Financial Consumer Agency of Canada’s Link will open in a new window or tab information on choosing an advisor.