Your retirement should be almost within reach (if you are not already there) and all those years of saving are over.

This is the decade when government pensions kick in. You can start collecting a reduced CPP as early as age 60 and, if you are close to this age now, OAS at 65.

This is the time to fine-tune your plans to help ensure a smooth transition. You should be gradually trying to figure out the kind of retirement lifestyle you’d like and draw up a realistic budget. That in turn determines how much you still need to save.

6% of people in their 60’s have kids still living at home.

30% are helping support adult children.

At this stage you still have lots of options. You may want to retire early, or change jobs and do something you love more even if it’s for less money. If your finances are tight you may need to think about working longer. Delaying retirement for two or three years can have a big impact. You’ll be able to draw more each year from your nest egg and your government pensions pay more each year if you start them later.

70% admit they didn’t personally choose their retirement date.

You may need less than you think

Living well can be cheaper in your 60’s. Enjoying a typical middle class lifestyle costs less than you think.  You’re probably no longer making mortgage and debt payments, supporting children, and covering work expenses – and you will no longer be saving for retirement.

With reduced spending, you need less income, so your taxes go down too. Also, you benefit from extra tax breaks specifically for seniors.

A comfortable middle class retirement costs about $42,000 – $72,000 per year per couple (or $30,000 – $50,000 for singles), provided you have your home paid off.

Have the basics covered and plan on a little bit of spending for fun things like entertainment or travel.

Make it last

Now is the time to adjust your portfolio for retirement. For most people, CPP (or QPP) and OAS will replace less than 40% of their job income. You’ll probably have to rely on your own savings for extra cash.

This is a good time to reduce the overall risk level of your investments by increasing your allocation of short-term bonds and/or GICs. You still need the inflation-beating returns of equities, but be particularly wary of the potential impact of a big downturn in the market, especially in the first few years. You will have less time to recover.

At the start of retirement ensure you can generate 5 – 10 years of cash flow for at least your basic needs.  Make sure you have some combination of pensions, dividends, bond interest, bond or GIC ladders, annuities and a reasonable reserve of cash.

Plan to withdraw from your portfolio in a tax-effective manner. Take a balanced approach between withdrawals of taxable and non-taxable sources to even out taxes and clawbacks.

Worried about running out of funds?

What do you do if your savings won’t provide enough money to pay for the retirement you would like?  You can always earn more income with contract or temporary work, setting up a small business, or working part-time doing something you enjoy.

Often there are other things you can do to bolster your finances like downsizing or relocating to a less expensive location.

You could also consider longevity insurance, which is designed to provide a guaranteed income for life once the policyholder reaches old age – typically around 85.

Everyone needs an estate plan

A proper estate plan will ensure that your hard-earned money goes to your loved ones as much as possible – with as little as possible going to the taxman.

It’s well worth paying a lawyer to draft up a will. A lawyer can also help you with medical and financial powers of attorney. Once that’s done, it’s crucial to talk to your family about the contents.

In general, a surviving spouse won’t have to pay tax on most assets left to them. The biggest hit comes when assets are transferred to the next generation. If you think it’s necessary, talk to a lawyer or accountant about gifting assets, spreading out capital gains over time, or designing a testamentary trust.

Final thoughts

Average age of retirement is 62.

You should aim to develop an active lifestyle that combines recreation and social activities that keep you healthy, fit and engaged in life. You may continue to work but hopefully, because you want to rather than because you have to. Volunteering can be a meaningful way to stay active.

Make sure your plans are in line with the resources you have to fund them. Prepare for contingencies and make adjustments whenever circumstances change.

Financial takeaway for your sixties – Assess and reassess.

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