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7 ways to prepare financially for retirement

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Transitioning from working life to retirement takes careful financial planning and decision-making – give yourself plenty of time to prepare. Here are some things you can do ahead of time.

1. Convert your savings to income

Research your income options and set up a plan so you have an income from the first day you retire. Options include RRIFs, annuities and unsheltered savings. Learn more about these options.

You may want to speak with a financial advisor to help you set a plan to meet your income needs in retirement. It may also be good time to review your investment goals and make any adjustments to your investments.

2. Apply for government benefits

Don’t wait until the last minute to apply for government benefits – it may mean a delay in getting your payments. For example, you need to apply for CPP 9 months before you retire in order to receive your payments in time. Learn more about government benefits.

3. Pay off your debts

Pay off your debts as soon as you can – ideally before you retire. To help you pay debt off faster, make sure you are paying the lowest interest rate you can get. Learn more about managing debt.

How can retirees reduce their debt in retirement?

Advisor Jim Yih speaks with Globe and Mail columnist Rob Carrick about how to handle debt when you retire.

4. Calculate your monthly income

Use this calculator to estimate how much monthly income you’ll receive from your savings, government benefits and any pensions.

5. Make a budget

Figure out how much you’ll need to spend to make ends meet in retirement – then see if it matches your monthly income. If it doesn’t, you’ll need to find ways to save more, cut spending or boost your income in retirement.

What will your retirement lifestyle cost?

Take this quiz to help you figure out the kind of lifestyle you want to have in retirement – and how much it will cost.

6. Review your insurance needs

As you get older, your insurance needs will likely change. For example, if you have fewer debts and dependants, you may not need as much life insurance coverage. But you might have more health problems, so you may want to consider critical illness insurance or long-term care insurance. Learn more about insurance planning for retirement.

Make sure you have enough insurance

Are you covered in case you or your spouse develop long-term health issues or have other emergency health problems? Unexpected health-care costs can be hard to cover when you’re on a fixed income.

7. Review your will and powers of attorney

If you’re about to retire, your will might need to be changed or updated. Having a valid, up-to-date will is essential to ensuring your estate is distributed as you intend it, and that your death does not create a legal and administrative burden to your family.

If you die without a valid will, a court will appoint someone to administer your estate and distribute the assets according to a formula set out in provincial estate and family laws. Learn more about wills.

You should also make sure you have a power of attorney, a legal document that names someone to make financial and other decisions for you when you can’t make them yourself. Choose someone you trust, who knows you and will carry out your wishes. Learn more about powers of attorney.


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