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Top 6 things to consider as you near retirement

Are you inching closer to your retirement? Already dreaming about how you’ll get to spend your newfound freedom, or are you worrying about the details? Planning for your retirement can be both exciting and overwhelming. There’s a lot to prepare for.

Whether you’re a few short years from retirement, or have a longer way to go, it’s time to get down to the details. To refine your plan. Here are 6 things you should be considering as you get close in on retirement.

  • Shift from accumulation toward income
  • Rebalance your portfolio
  • Confirm your income sources
  • Put an estate plan in place
  • Consider your health plan
  • Plan for the unexpected


1 . Shift your investment mindset from accumulation towards income

You’ve likely been saving and accumulating wealth for years, but in retirement, you’ll likely be drawing down on your investments. Are your investments appropriately diversified for income rather than accumulation? Is your level of risk appropriate? Check out our Guide to dividend and income investing to get a better understanding of what you should consider.

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2. Rebalance your portfolio

Regardless of your age and level of risk, it's a good idea to rebalance your portfolio at least once a year to ensure that you're sticking with your target. This applies whether your target allocation is 60% equities and 40% bonds and other less risky investments, or 85% equities and 15% bonds. Portfolio rebalancing will help you to maintain your target asset allocation and reduce your exposure to risk outside of your comfort zone.

3. Confirm your retirement income sources

Once your employment income ends, you’ll need to replace it with your retirement income. Most people draw retirement income from multiple sources. Some common income sources include:

  • Depending on your employment and income levels, you’ll likely be eligible for Canada Pension Plan (CPP) and Old Age Security (OAS) benefits at retirement. Payments are not automatic, so you’ll need to think about applying with the Government of Canada in advance so your pension starts when you need it. You may also want to check out our articles on CPP and OAS to understand how delaying your pension benefit can result in higher payments in later years. 

  • If you contribute to a company pension plan, you’ll be eligible for payments upon retirement. Is your pension a defined benefit or defined contribution plan? Every pension plan works differently, but some defined benefit plans reward you with higher payments if you can delay for even a year or so. Speak to your company’s human resources department to find out what options you have. 

  • At some point, you’ll need to start drawing on your savings. You must convert your RRSPs by December 31 of the year you turn 71, but you may want to consider converting the funds to income earlier - to a registered retirement income fund (RRIF) or life annuity. Check out our article on Seven compelling reasons to transfer your RRSP to a RRIF.

4. Ensure your estate plan is in place

It can be daunting, but don’t put it off. Yes, there will be paperwork. And yes, you’ll likely have to engage with a lawyer to put your estate plan in place. But it’s worth the effort and attention. It’s essentially a roadmap that can be used to outline everything from the distribution and management of your assets and property, to setting up plans for medical and personal care later in life. At its best, an estate plan should give you comfort in your retirement, the peace of mind that comes with knowing you and your loved ones are taken care of.

5. Take an honest look at your health

No one can know exactly what the future holds, but for many Canadians, with age can come health issues. Whether it’s simply mild wear and tear on the body, or more serious health conditions, your health can one of the biggest sources of risk in your retirement plan. Have you included plans for the care of your health in your estate plan? If you have increased costs for medication in your later years, how much of your prescriptions will be covered by government health care plans? Should you be considering health insurance?

6. Plan for the unexpected

It’s important to ensure you have an emergency fund in place for retirement. What if you suddenly experience mobility challenges? Will you have enough for a retrofit or renovation to accommodate your changing needs? The “emergency” may not even be yours. You may decide to help out a family member with education or housing costs that you didn’t budget for. An emergency fund will help you manage the unexpected.

If you’ve still got some time before your retirement – at least 10 to 15 years or so – learn more about what you should be considering to get yourself prepared.

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The information contained in this article was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This article is provided as a general source of information and should not be considered personal investment advice or a solicitation to buy or sell any mutual funds and other securities.