Planner: How to tackle retirement planning

Planning for retirement is no easy task. So break down people’s priorities and place them in rank order. Here are some common priorities.

Top priorities

Determine if your goals have changed

As you wind down your working life, your goals can change. If you want to travel, for instance, revisit your destinations list and determine whether it’s financially possible. If you and your partner can’t agree on common goals, try independently creating written lists and then comparing notes. Then, book a meeting with your advisor to discuss those lists and work to find common ground.

Decide when you’ll sign up for CPP

If you haven’t put away enough extra cash, you may need to sign up for CPP as soon as you stop working. But if you’ve built significant savings, you have to make a choice: wait until age 70 to apply for CPP and maximize monthly payouts, or start receiving payouts sometime between age 60 and 70 and get less each month. If you sign up before age 65, payouts will be reduced 0.6% for each month you’re under age 65. So, intuitively, it pays to wait. However, government programs can change, and it’s possible waiting until age 70 could face you with a different payout or tax benefits regime.

Decide how to handle your workplace pension

Many pension plans give you the option to commute your pension. This means taking some or all of its built up funds in a lump sum, but there’s a lot to consider. Your choice will depend on what type of pension you have (defined benefit or defined contribution plans; indexed or non-indexed) as well as whether you need to start withdrawing funds right after retiring.

Decide what to do with your RRSP

If you have an RRSP, you’ll need to convert it to a RRIF or annuity, or even collapse it, by the end of the year you turn 71. Since each option affects how and for how long you’ll receive retirement payouts, you need to know the drawbacks and benefits.

Decide on a drawdown portfolio

When building a drawdown plan, you need to make a list of both income sources during retirement and your anticipated expenses. If you’d prefer consistent monthly payouts, tell your advisor during retirement discussions. Returns can vary based on market activity, and that can result in uneven monthly payments.

Secondary priorities

Talk inheritance with the kids

Discussing your eventual death with children can be difficult. First, talk to your family about your estate plan, as well as what you’d like them to do if you fall ill. You also need to appoint Powers of Attorney for your finances and personal care carefully.

Write or revisit your will

As soon as you have assets in your name, you need to create a will. Then, as you age, make sure it’s updated, especially if you own multiple properties; or if you divorce, or become widowed, and later remarry.

Put together a business succession plan

If you own a business, you need to decide how you’ll either pass it to the next generation or sell it, as well as how you can do so tax-efficiently. You’ll also need to determine its value before you sell, and this process includes determining the value of any intangible assets.

Tertiary priorities

Deal with digital assets

Nowadays, many people are compiling digital assets. If you have multiple email accounts, and if you store files (including photos or other things of sentimental value) online and on your phone, then you need to figure out how those accounts should handled when you die. Also, you may have accounts, such as PayPal, which have actual monetary value.

Prepare for retirement plan detours

Even when you plan carefully, you need to prepare for contingencies. Many retirees or near-retirees struggle with costs stemming from aging parents or their kids’ educations; so think ahead about what you’ll do if emergency expenses crop up.