The news of a COVID-19 vaccine has brought a great deal of excitement to many Canadians, especially those that are retired.
If you are retired, or are getting ready to retire, it is important to take your future into your own hands and make sure it is everything you want it to be. To help you navigate through your planning, we have prepared a list of some ways to ensure your retirement is on track in 2021 and beyond.
The key to a smooth retirement is having a plan in place to make the most of your time, while also being realistic about your goals. Such a plan can include a focus on increasing your fitness level, spending time with family, learning new skills, renovating your home or travelling to someplace new when travel restrictions are lifted.
Get a personalized financial plan
A financial plan will determine what your income will look like in your retirement, and an estate plan will help to ensure you keep more money in the pockets of your family, instead of those of the tax man. It is crucial that, before you create a plan, you are realistic with how much you will need to spend. Ask yourself the tough questions: have you considered early gifting for your kids, insurance and the possibility of needing late-stage care?
Don’t hide in GICs
Make sure your money is working for you. Hoarding cash or sitting in GICs (guaranteed investment certificates) – especially when rates are extremely low – may actually provide you a negative return after inflation and taxes. This is not a good investment strategy.
Many retirees are worried about what is around the next corner. It is therefore vital that you have a financial team with an active investment strategy. You want to make sure they are monitoring markets constantly and making changes to your portfolio as needed.
Invest with a great adviser
Not all advisers are created equal. It is vital for you and your money that you have an experienced portfolio manager with a proven track record, as well as a qualified team working for you. It is important that you have confidence in them, and that you have open communication – especially during volatile times. Having the right financial team will help ensure you have enough money during retirement, and also the peace of mind you need to enjoy the best years of your life.
Focus on tax savings
There are ways to minimize tax pain by taking advantage of some tax-saving strategies.
Tax-Free Savings Accounts are a great investment vehicle where all growth is tax exempt, so make sure you have maxed out your contribution every year. Make sure you are using all the tax credits you can to reduce your income, and split income between spouses when possible to reduce your overall tax bill. Another great idea for some retirees is to defer property tax annually. Early gifting to children or grandchildren can also be a great tool to reduce your taxes further.
Make market volatility your friend
It is expected that there will be some volatility on the road back to economic growth, so make sure you have a team that will get you through the sharp turns. Volatility doesn’t have to be scary, as it can create great opportunities for your portfolio – as long as you, or your financial adviser, are on top of it.
Finally, make 2021 fun. Everyone’s retirement has suffered over the past year, but there are likely bright times ahead as we get past the pandemic. It is important that you try to get back to the things you enjoy. This is what you have worked hard for, so plan ahead and ensure your retirement is on track. If you have a team to guide you and protect your nest egg through all market conditions, you will be set for a great retirement and will be able to sleep at night. •
Lori Pinkowski is a senior vice-president and portfolio manager at Canaccord Genuity Wealth Management. Her views, including any recommendations expressed in this article, are not necessarily those of Canaccord Genuity Corp. Visit Pinkowski.ca.