By Ilona Biro and the Sun Life team
Are you retiring earlier than planned? See how an advisor can help you make a smooth transition into retirement, whether you feel ready or not.
For most of our working lives, retirement can seem like a distant dream. However, a sudden change at the end of a career can precipitate retirement. The thought of retiring earlier than planned can be alarming. Do not panic! You have been preparing for this all your life. It is only the calendar that has changed.
What’s the first thing to do? Gather all of your relevant documents and speak with an advisor to plan moving forward. Here are some essential things you can discuss with him.
How to prepare for an unplanned retirement?
Should you retire early or postpone it?
Five winning strategies for coping with job loss
What are your sources of retirement income?
A retirement portfolio is made up of many components:
State benefits
Employment Benefits
Income from a Registered Retirement Savings Plan (RRSP)
Part-time employment income
Home equity
etc
You will need to review your sources of income and take stock of your finances with your advisor. This allows you to verify that you will have enough income for the lifestyle you choose. This will also allow you to continue to receive a complete Old Age Security (OAS) pension. However, if you dip into your savings sooner than expected, you may have to make concessions.
What’s the best way to leverage your retirement income?
What can you do with your RRSP?
You should have a plan for what to do with your RRSP if you have one. For example, it may be tempting to convert it immediately into a Registered Retirement Income Fund (RRIF). However, depending on the situation, it may be wiser to wait. You don’t have to decide what to do with your RRSP until you turn 71.
How do RRIFs work?
What is an RRIF? (video)
What can you do with your early retirement offer?
If your employer pays you early retirement benefits, it is essential to get advice. An advisor can show you how to maximize your retirement income while minimizing your expenses.
How does the stock market affect your retirement?
If you’re retiring soon, you may be worried about market volatility. You would certainly like to ensure that you keep the gains from your investments. Your advisor can help you develop a strategy that matches your risk tolerance profile. This will come in handy, as you will likely start earning this income sooner than expected.
The advisor may, for example, suggest stress testing your portfolio. This test lets you see what might happen if your investment returns drop during your retirement.
What to do when the stock market tumbles?
How to reduce investment risk
Another option is to use some of your retirement savings to purchase an annuity. Life annuities offer you a guaranteed monthly amount until the end of your life. This helps to cushion the shock in the event of a market downturn.
What is an annuity? (video)
Please find out how much regular income you could get from a life annuity with our annuity calculator.
What will your retirement expenses be?
Everyone has a different vision of the ideal retirement. It will take time to determine how you want to spend your retirement years.
How much money will you need in retirement?
Welcome this transition. “Instead of accumulating income, you are now in a period where you must above all preserve your income. Adapting can be difficult,” says Councilor Scott Evans.
The good news? “You will certainly spend less than when you were employed,” he says. You will no longer have to buy lunches or clothes for work. ยป
Work with your advisor to put a number on some of the projects you want to achieve during your retirement years. This will help you find ways to reallocate your resources to meet your new needs best and achieve your unique goals.
Do you need to change your will, insurance policies or estate plan?
As you get older, you need to make sure everything is in place in severe illness or injury. This is especially important if you plan to spend time outside the country during your retirement. It is advisable to review your important documents every.
