Maintain Your Lifestyle in Retirement

How to have enough money to retire – and retire well.

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In the past, having enough money to maintain one’s lifestyle wasn’t a significant issue. People didn’t live long enough to use up all their savings and people didn’t spend nearly as much on things like travel or second homes as they do now.

These days, though, people want to continue living the same life in retirement as they did during their working years. That can get expensive. How can people make their money last and live the life they want? Aurele Courcelles, Investors Group’s Assistant Vice-President of Tax and Estate Planning explains.

  • More people than ever are living past age 85. I've done well financially, but should I worry about whether I'll have enough money to last into my 90s?

    It’s something everyone should think about. Travel may consume a lot of your resources early in retirement, while health care costs could become more important later on. As for how much you’ll need, some use the rule of needing 70 percent to 80 percent of pre-retirement income to maintain your lifestyle in retirement. You might need more or less than this, depending on your retirement vision, plus the amounts could vary as you get older.
  • I believe my basic needs are adequately funded in retirement, but how do I know if I have enough to maintain the lifestyle I want?

    How you want to live in retirement will dictate your costs. Start by identifying what you want to do in the various stages of retirement – stay close to home and your costs will be lower, but travel regularly or have expensive hobbies and you will need more money. Also consider if you want to provide some financial assistance to your kids. Identifying and quantifying the cost of these more discretionary expenses provides the basis for determining if you can maintain your lifestyle.
  • I’m thinking of buying that vacation property I’ve always dreamed of owning, but how do I know if this is feasible?

    The purchase of that dream vacation property goes beyond the initial purchase price. Repairs and maintenance of the property, insurance and ongoing property taxes all add to the cost of ownership. Is it better to rent than own? Many retirees prefer to rent a condo or vacation home if and when they want to use it. This removes the costs associated with ownership, not to mention you are not tied to one specific location. If the vacation property is outside Canada, you need to know the tax and property ownership laws applicable in that location. This again will factor into the buy versus rent decision.
  • How can I maximize my retirement paycheque?

    You may want to consider minimizing your taxes instead. By paying less tax, you increase your cash flow, which can mean needing to draw less from your retirement assets. Tax planning in retirement can include many things, from splitting CPP with your spouse to pension income splitting, from maximizing the value of tax credits (i.e., the Age Credit, the Pension Income Credit and the Medical Expense Credit) to minimizing any Old Age Security claw backs.
  • How can I protect my retirement income and assets yet still leave an estate for my beneficiaries?

    Protecting your retirement income can take many forms, including protecting your income from increases in the cost of living — that can eat away at the extra nest egg you’re trying to preserve for your heirs. You also want to protect your assets from unforeseen events. Make sure you have adequate insurance coverage for any health/medical challenges that may arise – especially disability insurance during your working years along with critical illness and long-term care insurance.
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