Retirement Planning

Retirement planning today has taken on many new dimensions that never had to be considered by earlier generations.  For one, people are living longer. A person who turns 65 today could be expected to live as many as 20 years in retirement as compared to a retiree in 1950 who lived,  on average, an additional 15 years.  Longer life spans have created a number of new issues that need to be taken into consideration when planning for retirement.

Lifetime Income Need

There actually is a lifetime after retirement and the need to be able to provide for a steady stream of income that cannot be outlived is more important than ever.  With the prospect of paying for retirement needs for as many as 20 years, retirees need to be concerned with maintaining their cost-of-living. 

Health Care Needs

Longer life spans can also translate into more health issues that arise in the process of aging.  Planning for long-term care, in the event of a serious disability or chronic illness, is becoming a key element of retirement plans today. 

Estate Protection

Planning for the transfer of assets at death is a critical element of retirement planning especially if there are survivors who are dependent upon the assets for their financial security.  Planning for estate transfer can be as simple as drafting a will, which is essential to ensure that assets are transferred according to the wishes of the decedent. Larger estates may be confronted with settlement costs if the proper planning is not done.

Paying for Retirement

Retirees who have prepared for their retirement usually rely upon three main sources of income: Canada Pension Plan, individual or employer-sponsored retirement plans, and their own savings or investments.  A sound retirement plan will emphasize qualified plans and personal savings as the primary sources with Government benefits as a safety net for steady income.

Canada Pension Plan

The Canada Pension Plan was established as a safety net for people who, after paying into the system from their earnings, could rely upon a steady stream of income for the rest of their lives.  The amount paid in benefits is based upon the earnings of an individual while working.  If a person wanted to continue to work and delay receiving benefits, they could do so build up a larger benefit.  Conversely, early retirement benefits are available, at a reduced level, as early as age 60.

Employer-Sponsored Plans

Depending on the size and type of the organization, an employer may offer a Group RRSP Plan, a Defined Contribution Pension Plan or a Defined Benefit Pension Plan.

For more information on retirement income needs and income sources, please contact us today.