The recent market volatility has affected just about everybody’s financial and investment situations – so, if you were planning to retire soon, will it still be possible?
Of course, the answer depends somewhat on your employment situation. With so many people’s jobs being affected by the coronavirus pandemic, your retirement plans may also have been thrown into confusion. But assuming your employment is still stable, what adjustments in your financial and investment strategies might you need to make for your retirement?
Here are a few areas to consider, and some questions to ask yourself:
Retirement goals – Now is a good time to review your retirement goals and assess your progress toward achieving them. You may want to work with a financial professional to determine if the current environment has materially affected your goals or if you need to make modest adjustments to stay on track.
Retirement lifestyle – You probably created your investment strategy with a particular type of retirement lifestyle in mind. Perhaps you had planned to become a world traveler when your working days were over. Of course, in the near term, extensive travel may not be possible, anyway, but once we move past the pandemic, your freedom to roam will likely return. But if your investment portfolio is not where you thought it might be, can you (or do you want to) adapt your lifestyle plans? And can you accept the same flexibility with your other lifestyle goals, such as purchasing a vacation home, pursuing hobbies, and so on?
Tradeoffs – Based on your retirement goals and your willingness to adjust your retirement lifestyle, you’ll want to consider your options and tradeoffs. For example, would you be willing to work more years than you had originally planned in exchange for greater confidence in your ability to enjoy a comfortable retirement lifestyle? By working longer, you can continue adding to your Registered Retirement Savings Plan (RRSP) and Tax Free Savings Account (TFSA) or similar retirement plan, and you may be able to push back the date you start receiving CPP/QPP and/or OAS to receive bigger monthly benefits. You might also review your budget for opportunities to reduce spending today and potentially save more toward your retirement goals.
CPP/QPP and OAS – You can file for CPP/QPP benefits as early as 60, but the amount you receive will be higher the longer you wait. The standard age to take CPP benefits is age 65 but can be deferred until age 70, with each month of deferral resulting in an increased benefit. Similarly, OAS claims can be deferred beyond age 65 to benefit from higher payments. As you created your retirement plans, you likely also calculated when you would take CPP/QPP and OAS, but you may need to review those choices. If you postpone retirement a few years, what effect will that have on when you choose to make your claims and, consequently, the size of your benefits? You won’t want to make a hasty decision, because once you start taking CPP/QPP and/or OAS, you can’t undo your choice.This is certainly a challenging time to be entering retirement, and you’ll have some questions to answer. But even in the midst of uncertainty, you still have many choices. Consider them carefully and make the decisions that work for you.
