Start with your existing budget and be realistic about your expenses
During these tumultuous economic times, those close to retirement may be feeling anxious. You may have been offered an early retirement package and are feeling overwhelmed to make a big decision during an uncertain time.
Often clients will ask “How much do I need to retire?” Some have a goal or magic number in mind for how much they wish to save before deciding to retire while others are unsure where to even start. One of the first steps to figuring out your retirement number or whether you can afford to retire is to take a good look at your budget. Getting an idea of how much you’ve actually been spending is a good place to start. You can then reduce any employment-specific expenses such as dry cleaning or parking at the office and add in any additional costs associated with hobbies and additional travel. Being realistic about your expenses will help you determine how much you will need to spend in retirement.
Proper planning includes financial & emotional considerations
When analyzing your retirement needs, you should also consider how you will spend your time. The financial aspect is often discussed in the context of retirement, but being prepared mentally for retirement is also an important factor.
Read one recent retiree’s story of her own journey.
When preparing for retirement, timing is important to keep in mind: retiring early may mean less years of additional savings and loss of years of contribution to CPP, resulting in an overall smaller income stream throughout retirement. You may also be forfeiting group insurance coverage through an employer. Now may be a good time for a full insurance review.
Your Richardson Wealth Advisor, along with our in-house Tax & Estate Planning professionals can assist you with how to best draw from your accounts during retirement, assist with transferring registered accounts out of a group plan, introduce you to one of our insurance consultants, or provide articles and information on topics such as:
- Canada Pension Plan (CPP)
- Early Retirement Options
- Unlocking your Locked-In Retirement Accounts (LIRAs)
- Income Splitting
Contact a Richardson Wealth Advisor for information.