Compared to last year, 2021 is off to a great start – the markets are up, vaccines are being rolled out and the future looks a lot brighter than it did in 2020.
We look forward to the eventual end of lockdowns and restrictions for our retired clients, as they will be free to once again enjoy retirement, travel, and simply spend time with their families.
An exciting and well-planned retirement is not just going to happen on its own, however. You must make it happen. If your goal is to have a better year in 2021, then you will have to plan for it.
So, how do you get back on track to start enjoying retirement again?
The first step is to ensure that you have a financial plan as this will determine what sort of income you can spend in retirement. Revisit your goals and be realistic as your circumstances may have changed. Look to set attainable goals whether it’s getting in shape, making more time for family, or spending less or perhaps more!
Regardless what you decide, make sure you write them down and hold yourself accountable. Meet with a financial advisor to revisit your financial plan.
Secondly, there are ways to minimize tax pain by taking advantage of some tax saving strategies. TFSAs are a great investment vehicle where all growth is tax exempt so make sure you have maxed out your contribution every year. Make sure you are using all the tax credits you can to reduce your income, and split income between spouses when possible to reduce your overall tax bill.
Another great idea for some retirees is to defer property tax annually. Early gifting to children or grandchildren can also be a great tool to reduce your taxes further, but always consult with a financial or tax professional to ensure this strategy is right for you and your family.
Next, you should ensure that you keep your money invested in stocks and bonds so that it is earning for you when you aren’t spending it. Especially with today’s low interest rates, you shouldn’t hoard cash and sit in GICs as you will likely lose money after taxes and inflation. Make sure you are invested properly in an actively managed portfolio that meets your goals and be critical of your advisor to ensure you are with the right person or team.
Finally, make 2021 fun! Everyone’s retirement has suffered over the past year but there are likely bright times ahead as we get past the pandemic. It is important that you try to get back to the things you enjoy. This is what you have worked hard for, so plan ahead and ensure your retirement is on track.
If you have a team to guide you and protect your nest egg through all market conditions, you will be set for a great retirement and be able to sleep soundly at night.
Lori Pinkowski is a senior portfolio manager and senior vice president at Canaccord Genuity Corp., a member of the Canadian Investor Protection Fund. This is for informational purposes only and does not necessarily reflect the opinions of Canaccord Genuity. Lori can answer any questions at 604-915-LORI or [email protected]. You can also listen to her every Wednesday morning on CKNW at 8:40 a.m.
