How to plan for retirement

Changes to your personal financial situation can mean you may need to re-think your retirement plan. Here are some tips to help you manage your retirement financial planning.

Retirement may be something decades away, or it may be something fast approaching. One thing is for sure, there is no single plan that works for everyone.

Some Canadians have the option of participating in an employer-led retirement savings plan, while others may not have access to this option or prefer to choose an alternate way of saving for the future, like saving for their retirement through a Registered Retirement Savings Plan (RRSP).

Regardless of your personal situation, changes to the economy and your personal financial situation can mean you may need to re-think your retirement plan and assess if you’re on track to meet your personal financial goals.

What is a retirement plan?

A retirement plan is made up of many parts. It lays out a timeline, including when you plan to retire and the length of time you anticipate that you will need retirement income. Life insurance can factor in, especially if you have a policy that includes investments. Creating or updating your will could help you navigate your situation and help alleviate future tax burdens for your loved ones. While planning for retirement, setting up an emergency fund is a good idea so that unexpected expenses don’t upset your retirement plan.

Four questions to ask as you plan for retirement:

What will be your source of income during retirement?

If you have worked in Canada and have paid into the Canada Pension Fund (CPP) or Quebec Pension Fund (QPP), you could be eligible to receive one of these benefits. In addition, the Old Age Security (OAS) pension is a monthly payment you can get if you are 65 and older. As part of your retirement plan, you may be eligible to receive a pension from your employer. Then there’s income from investments you’ve made over the years, including RRSPs, TFSAs, even the equity in your home. Add up all sources to determine your income in retirement. For more information about government benefits, visit the Government of Canada website.

How much will you need to live?

Believe it or not, you may not need as much money in retirement as you need now. For example, if you are paying off a mortgage now but won’t be in the future, that’s one big monthly expense eliminated. Also, children’s school tuition and even weddings may be behind you. For many people, they continue to save for retirement until they retire. This may also be the case for you. As a rule of thumb, we often start by assuming you will need approximately 70% of your working income when you are in retirement. It may be hard to imagine what life will be like after work but take the time and think about what your expenses may be. And don’t forget to add in things like travel – you’ve still got places to see!

Try our Retirement Savings Calculator

When can you convert your RRSPs?

If you have invested in an RRSP, it will automatically convert to a registered retirement income fund (RRIF) in the year you turn 71. Of course, you can opt to convert your RRSP before then, but you should consider the tax implications. The idea is to wait as long as you can before withdrawing from a RRIF, with the assumption that your income will be lower, so that you pay less income tax.

Should you sell your house?

This decision could have an impact on you both financially and emotionally. Your home may be the largest investment you own. Plus, there are several lifestyle costs and considerations to keep in mind. Talking with a TD advisor could help you decide if you should sell or stay. Either way, we’re here for you.

Book an appointment with a TD advisor. They can help you with your plan for retirement using TD Goal Builder. They can also provide advice suited to helping you meet your retirement goals based on your financial situation.  Once your retirement goals are set using TD Goal Builder, you will be able to keep track of your progress online.

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