If you’re still working at age 60 you may be thinking of retirement now, or in the near future. Life as you know it will be over, but that doesn’t mean you’ll be trudging up to the Shady Rest Retirement Home.
Retirement isn’t about wearing elastic-waist pants and knee socks with sandals and taking in the early bird special at 4:30pm after a rousing game of shuffleboard and a good nap (unless, of course, that’s what you want).
It’s fine to take off a few months to relax and sleep in, but sooner or later you’ll want to do something productive with your time. Now is the time to think about how you will spend your days – up to 40 years worth.
Your health
Nothing is more important than your good health. A good diet, exercise and regular check-ups are more important than ever at this time. Keeping active and your mind interested staves of depression, which can reduce your life expectancy even if there are no other signs of illness.
If you’re lucky you can still keep the health and dental plans from your workplace. If this isn’t the case for you, it’s imperative to get enrolled in a private or government health and drug plan now.
Related: Drug Coverage For Seniors
You may want to check into critical care or long term care insurance now. These plans can be expensive, but if you don’t have substantial assets that can pay the exorbitant costs of institutional care, they may be well worth it. Some plans have a return of premiums if the insurance is not required.
Your wealth
If you decide to retire before age 65 your retirement income will be substantially reduced. If you have a company pension plan, benefits will be reduced by up to one third. You can elect to receive CPP at age 60 but the payments will be reduced by up to 30% (legislation is increasing this reduction to 36% over the next 5 years).
Old Age Security payments currently start at 65 (age of eligibility increases to 67 in 2023). The OAS payment is subject to clawback when income reaches $69,562 and above.
Now is the time to review your income stream. To reduce taxes (and clawbacks), it may make sense to start withdrawing from your RRSP now instead of waiting, especially if you retire before age 65.
Related: Using Tax Free Savings Accounts In Retirement
Review your estate plan. Make sure your will, Powers of Attorney and living will are in order. Some people take out a term life insurance policy at this time to pay the taxes due on the estate. One option is to have your beneficiaries pay the premiums on the policy, as they will be the ones to eventually benefit.
Take advantage of any senior discounts that are available, from movies, shopping days, vacations and many others. Some people don’t like to admit to their advancing age, but you might as well take the perks. I have discovered that the major banks have greatly reduced their seniors’ benefits to almost nothing compared to several years ago – and you have to ask for them.
Your happiness
Many people know exactly how they will spend their retirement years. Travel is popular option, especially for the first few years. Finally having the time to pursue favourite hobbies or discover a new interest is something to look forward to.
Related: How CARP Benefits Aging Canadians
Some people decide to volunteer more often for their favourite charities. Others plan on taking special interest courses or even pursue a degree or retraining for another job. Some look forward to spending more time with family and grandchildren.
Where will you live? Will you keep the family home or downsize? Do you like the idea of a seniors’ or over-50 residence? (If this is your choice make sure you continue to interact with people of all ages so you don’t become an old fuddy-duddy.) Start thinking about it now if you haven’t already done so.
Try some things out before retirement to make sure you really want to pursue them more regularly. Make sure you have sufficient funds for what you want to do. Reevaluate as necessary. You may be retired for as long as you were employed. Re-invent yourself. Have fun.
