Are you worried about outliving your retirement savings? You’re not alone. Almost two in three Canadians believe they will outlive their money. A worry-free retirement is something you should look forward to. Taking action is one of the best ways to conquer the fear of outliving your retirement savings. Let’s look at some steps you can take to eliminate the concern you’ll run out of money in retirement.

Decide what retirement will look like for you

You might want to travel, downsize, move to the country or the city, start a business or pursue hobbies you had no time for when you were working. The possibilities are endless, but your chosen lifestyle will have financial implications.

Decide how you want to spend your retirement years and research the cost. Understanding and planning for these costs, including long-term care or assisted living, can bring a sense of relief and control to your retirement planning.

Research the costs of your retirement plan

How much is enough? The money you’ll need depends on how you want to live and what you want to do. Some work-related expenses will disappear when you retire. On the other hand, they may be replaced with other costs like travel or health care.

One general rule is to plan to have 70% of your pre-retirement income in retirement. Retirement income can come from multiple sources. You could have a part-time job, rental income, or sell some assets like a business or property.  Employer pensions, the Canada Pension Plan, Old Age Security, your Registered Retirement Savings Plan, and the cash value of a PAR or an annuity can be other sources of income.

Knowing how much your retirement will cost annually and how much you can expect from various sources of income will help you determine if you have a shortfall or if your money will last.

Make a plan

If you are facing a deficit in your retirement years, it’s not too late to take steps to minimize it. Meeting with a certified financial planner, accountant and estate lawyer can help you create a reliable retirement plan and eliminate the fear of outliving retirement savings.

So, how can these experts help you fund the retirement of your dreams and ensure that you don’t outlive your money?

Certified Financial Planner (CFP)

A financial planner is critical to retirement planning. They will assess your income and assets to determine the amount you need for your desired retirement. Their recommendations on investment solutions help ensure you’ll have the necessary funds when you retire.

Additionally, they can identify any financial gaps you might have. If your financial planner determines you need more money to live the life you want when you retire, they’ll recommend a solution to help you reach your goal. Some possibilities are:

• Delay retiring until you meet your savings goal
• Continue working part-time in retirement
• Insurance like funeral insurance or long-term care insurance to cover those costs
• A permanent life insurance policy with a cash surrender value you can access
• A life-long annuity to ensure you have income for life

Minimizing taxes is another crucial aspect of retirement planning. Most retirement income streams will affect your taxable income. Knowing which investment to access first will help reduce your tax bill. Your CFP will advise you on the most efficient tax strategies when you need to start using your investments. 

If you have multiple investments, having a tax-efficient plan to access them can significantly reduce your tax bill, thereby helping you maintain your wealth at all life stages.

Accountant

A CFP will advise you on the most tax-efficient way to use your investments. However, an accountant specializing in taxes can offer advice and additional insights into your financial situation. 

Estate lawyer

 As you age, it’s important to think about your estate and care if your health deteriorates. You may need a Power of Attorney for personal care and finances. Setting up a will is essential to ensure your assets are distributed according to your wishes. 

 Your CFP will help you decide how to structure your estate. Your lawyer will set up the necessary documents to accomplish your goals, such as the Power of Attorney and your will. Estate lawyers can provide additional insights into the legal aspects of creating an effective will.

Take action to live your retirement dream

Estimating your expenses, fulfilling your income and investment needs, and protecting your estate will ensure you don’t outlive your money. Working with the right professionals who can offer expert advice and guidance is essential to developing the best plan for your needs and feeling secure about your financial future.

At MDL Financial Group, we’ve been helping our clients create unbiased, customized financial plans for over 30 years. Our financial planners will work with you to build a strategy to live retirement your way without running out of money.  Fill out our contact page online to connect with a financial advisor. We look forward to working with you to build the future you want.

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https://mdlfinancialgroup.ca/estate-planning-strategies-to-reduce-estate-taxes/

https://mdlfinancialgroup.ca/how-to-protect-your-estate/

https://mdlfinancialgroup.ca/tax-opportunities-in-retirement/