Here are the most basic things you need to think about
By Matt Smith
You know the day is coming, but it can be tough to decide exactly when to embark on your retirement journey. Ever-rising life expectancies mean even more time to enjoy retirement, but that also means that you’ll need a bigger nest-egg.
Probably the biggest question to ask yourself is whether it’s financially viable for you to leave the workforce at this time. You need to know what amount of income you can expect in retirement and how that fits with your plans. You also need to be prepared to account for any debts that would follow you into retirement, such as an unpaid mortgage.
The Government of Canada’s website has a good retirement income calculator to get you started. Keep in mind that this doesn’t yet reflect the upcoming enhancements to the CPP, which will lead to greater benefits and higher contributions, starting in 2019. If you’re approaching or over the age of 65, check your eligibility for the Canada Pension Plan (CPP), Guaranteed Income Supplement (GIS), and Old Age Security (OAS). You’ll also want to look into your workplace pension plan if applicable.
You need to know not only how much income to expect, but how you’ll use it. Make sure you’re approaching retirement with a well thought-out budget. It’s a good idea to “practice being retired” by trying to live on this budget for a couple of years prior to leaving the workforce. This will allow you to see how realistic your plans are and give you insight into any budgeting changes that you may need to make. After this, you may find that you need to push your retirement date back a couple years, but you’ll have more reassurance going into it.
The decision of when to retire isn’t purely financial, of course, so you’ll want to weigh in factors such as your health and family. If you’re among the last of your friends still working, you may want to consider why that is—are you working because your finances demand it or is there another reason? Now is a good time to be honest with yourself. And if your work is affecting your health, then that’s definitely a matter for concern.
Like many people these days, you decide that rather than simply retiring outright, you’ll ease into retirement by switching to part-time hours or finding contract work.