Preparing for a Smooth Retirement: Steps to Take Before You Say Goodbye to Work

2 minute read

As retirement approaches, your focus should be on enjoying this exciting new chapter, not getting bogged down by a mountain of financial decisions. By addressing a few key financial matters ahead of time, you can step into retirement with comfort and confidence rather than a to-do list.

Assess Your Insurance Needs

When your working years come to an end, so do your employer's group benefits. It’s wise to consider a private health insurance plan to cover services like dental, vision, and other healthcare needs. Take the time to explore your options and decide whether purchasing a plan or covering these expenses out of pocket is the best route for you.

You might also want to consider permanent life insurance, especially for estate planning purposes. Life insurance can help cover taxes on estate assets or ensure equitable inheritance among children - like when one child inherits the family business while another receives the vacation property. Securing life insurance at a younger age also locks in lower premiums, making it a smart long-term investment.

Strategize Your Government Benefits

Deciding when to start receiving Canada Pension Plan (CPP), Quebec Pension Plan (QPP), and Old Age Security (OAS) benefits is crucial and requires early planning. You have the option to begin CPP or QPP benefits as early as age 60 or delay until age 70, with varying impacts on your monthly payout. OAS benefits typically start at 65, but deferring them until 70 can increase your payments by 36%. Several factors should influence your decision, including your health, tax situation, and overall retirement income strategy. It’s wise to consult with us at LDCU Financial Management to determine the best start dates for your situation, ensuring you make the most of your benefits.

Adjust Your Investment Portfolio

As retirement nears, it’s essential to adjust your investment portfolio to protect against potential market downturns that could affect your retirement plans. While equities are necessary for long-term growth, it’s usually prudent to reduce your exposure to risk by increasing your allocation to fixed-income investments.

Finding the right balance between growth and security is unique to each individual and depends on factors like your risk tolerance, retirement income sources, and your spouse’s financial situation. Various strategies, such as creating a cash reserve for the early years of retirement, can help you weather market fluctuations and protect your long-term financial health.

Manage Debt and Expenses

It’s far easier to pay off debt while you’re still earning income than when you’re living on retirement savings. Prioritize paying off high-interest debt, like credit cards, to save money on interest payments. Additionally, consider handling any significant home repairs or renovations now, as budgeting for these expenses may be more challenging once you retire.

By taking these proactive steps, you can ensure that your transition into retirement is as smooth and enjoyable as possible. Let LDCU Financial Management guide you on the right path to a worry-free retirement.