Making your retirement savings last
(NC) Congratulations, you've made it to retirement. After scrimping and saving through your working years, you can now enjoy the fruits of your labour — just make sure you spend it wisely and make it last. The financial experts from Desjardins Group have some tips to help you get started.
Supplemental pension plan (SPP)
• Also known as a corporate pension fund, it allows you to receive either an immediate or a deferred pension, based on the typical retirement age. The most appropriate decision about this depends on whether:
• You're eligible for a retirement pension without an actuarial reduction, don't hesitate–choose the immediate annuity.
• The pension is reduced by a fixed rate of less than a 6% penalty per year of early payment, immediate annuities are often more advantageous.
• The pension is reduced by 6% per year; the two choices are generally equivalent. It is also a good idea to find out if the deferred pension will be indexed between the time of the request and the start of the payments.
Canada Pension Plan (CPP)
If you have contributed enough, you can request your retirement pension when you turn 60 or wait until you're 65. If you're unsure on the best choice for you, your financial advisor can show you the benefits of retiring early, at 65 or later.
Old age security pension (OASP)
This pension is payable at the age of 65, and there is no benefit in not requesting it. It should be noted that as soon as your gross personal income (including the OASP) exceeds $69,000, you may be required to repay a portion of your pension benefits.
Registered retirement income fund (RRIF)
Starting at 71 years of age, you must convert your RRSPs to RRIFs. If possible, try to limit your withdrawals to the mandatory minimum to conserve your registered capital.
Life income fund (LIF)
Because the life income fund has withdrawal constraints (ceilings that cannot be exceeded), it is generally best to withdraw the maximum possible from the LIF before withdrawing from your other registered savings plans.
To ensure your success, be sure to discuss these points with your financial advisor:
• Have another look at your investor profile to verify your level of tolerance for risk as well as your comfort level with certain investments
• Realistically evaluate the lifestyle you wish to maintain, also taking into account your desire to leave an inheritance to loved ones
• Think about splitting your income and Canada Pension Plan (CPP) with your spouse to reduce the amount you pay in taxes
• Be mindful of the taxation level of your investment income
• Avoid unnecessary debt by making a budget and sticking to it
For more retirement planning tips and calculators, visit Desjardins Group at www.desjardins.com.
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