Evaluating your retirement options

With an accurate picture of what your retirement will cost, you and your advisor can determine if you are financially prepared and what action you need to take to meet your retirement needs.

Make adjustments as needed.
If you find that your expected income is insufficient, you’ll need to rethink your retirement plans. Since your advisor is familiar with your retirement goals and financial particulars, he or she is in an ideal position to offer suggestions and help you draft an alternative plan of action.

For example, your advisor may suggest that you postpone retirement to accumulate additional assets or look for ways to boost your current savings now. He or she may advise that you consider downsizing your home or reconsider some of your plans.

With retirement possibly spanning 30 years or longer, you can expect to make adjustments to your goals and plans in response to life changes and financial events. Anticipating these changes and addressing them with your advisor can go a long way in making your retirement a rewarding and worry-free experience.

A written retirement income plan not only puts you in the best position for success but also provides peace of mind.

A well-designed plan should help protect against the five key risks to retirement income:

  • Longevity: Canadians are leading longer and healthier lives, which means they need to plan for a retirement lasting 20 or 30 years or even longer
  • Inflation: Retirees need investment portfolios capable of keeping up with inflation. Even if the modest 2% inflation average of the past 20 years continues, it could erode the purchasing power of retirement income by 40% over a 25-year retirement.
  • Asset allocation: The 2008–2009 global financial crisis heightened anxiety about the stock market. But historically, equities have provided long-term growth that is critical to a retirement plan. A diversified portfolio that includes stocks, bonds and cash helps provide growth and protection against market volatility.
  • Withdrawal rate: The amount a person withdraws from savings each year can dramatically affect how long a portfolio can last. Too low a rate can result in an unnecessarily low standard of living, while too high a rate raises the danger that the portfolio will not last long enough. The right answer will depend on your unique financial situation, and it is an important topic to discuss with your advisor.
  • Health care: Individuals need to understand what health care costs are and are not covered by government health care programs, and plan according to what their own needs could be.

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Before you take any action, make sure you are completely comfortable with your retirement income plan.

Getting good advice
Getting good advice

TIP: Provide your advisor with the details of the early retirement offer, including:

  • Lump-sum severance or salary continuance
  • Bridge payments until normal pension payments begin, if applicable
  • Compensation for unused vacation and sick leave, if applicable
  • Extension of company benefits or a lump-sum payment to compensate for loss of benefits
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