Planning for retirement...
Retirement used to be simple. You’d work one job for your entire career and then you announced your retirement and went on to live happily with your employer sponsored pension.
The world is different today. The financial reality has changed (and continues to change) and we are also now living much longer. This means we need to plan ahead for retirement, even if we have a pension to rely on.
OPB has resources available to members and retirees to help with the financial component of retirement planning. The Retirement Planner allows for income and expenses to be recorded and “what if” scenarios to be explored. Client Service Advisors are also available to work with members and retirees to make financial decisions regarding retirement.
Here are three main questions to consider when planning the financial aspects of your retirement:
- How much income will I receive? Retirees have three primary sources of income in retirement – pensions, government benefits (i.e. CPP) and Old Age Security (OAS) as well as personal savings.
- How much money will I spend? You might spend less on clothes and commuting, but consider other ways you’re likely to spend in retirement – travelling, entertainment, hobbies, renovations, etc. Create a budget to project your anticipated spending.
- How long will I live as a retiree? – planning for retirement means facing the uncertainty of how long you will be able to enjoy retirement. Consider the age at which you plan to retire, your family’s history of longevity and your current and future health status. Statistically, a 60-year-old couple today has a 50% chance that one of the members of the couple will live to age 94.
Transitioning into retirement can be incredibly emotional. Work is not only a big part of our lives but, for many of us, it’s also a large part of our identities. Retiring isn’t just finding out how you’ll fill the extra hours in the day, but rather discovering who you are and what you want to be. With that in mind, we have provided our top three recommendations for living a happy, healthy retirement:
- Plan before your retirement what you’ll do after you retire. The first part of retirement might feel like an extended vacation, but once you’ve had a nice long break from working, you might need something to do.
- Create a new daily schedule and new weekly, monthly, yearly goals. Once retirement becomes your new normal, you’ll ENJOY this phase of your life with purpose.
- Develop new relationships and rearrange old ones. You’re never too old to make new, meaningful relationships and with extra time on your hands, you’re in the perfect position to spend more time with friends and family.
While it’s crucial to start planning for your financial future as early as you can, it’s important to also consider the more personal side of retirement. Canadians are now living between two and three decades past their normal retirement date which means you should start examining how you want all that time to be spent. Your work life may be ending, but living your life to its fullest is just starting.
Financial Literacy Month 2018
To help you strengthen your personal finance and pension knowledge, each week, we'll publish one new article with advice from our Client Service Advisors on various topics including: an introduction to financial literacy, pension literacy, goals, savings and debt and how they work together, and retirement planning.
To kick off the month, our first article examines the importance of understanding that pension literacy is an integral piece of your overall financial literacy.
Interested in learning more about financial literacy? Check out The Government of Canada's Financial Literacy Month page that includes some helpful resources and initiatives – visit Canada.ca to learn more.
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