Globe Advisor’s Best of 2023: Focus on retirement planning


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Most Canadians are advised to delay their Canada Pension Plan and Old Age Security benefits to age 70, if possible, but are left with the question of how to withdraw other retirement income tax efficiently until then.Getty Images/iStockphoto

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Retiring comfortably with enough assets to last throughout this stage of life is the one major goal that every advisor helps clients plan for – regardless of what other important life events and milestones they may provide advice on.

To do that properly, advisors need to consider many factors during clients’ working lives, and retirement plans require adjustments as circumstances change. Those plans then take on a greater level of importance and complexity as clients approach retirement and enter the golden years.

Here are 10 articles on retirement planning strategies and other related issues of consideration that drew Globe Advisor readers’ attention in 2023:

Is it a good idea to take out your CPP early and invest it?

Although Julia Chung, chief executive officer, partner and senior financial planner at fee-only firm Spring Planning Inc. in Vancouver, advocates for Canadians to delay receiving their Canada Pension Plan (CPP) or Quebec Pension Plan benefits when possible, she says some Canadians believe they can make better use of the funds by taking them sooner.

How retirees can overcome ‘irrational’ saving and enjoy their money

Some seniors are too frugal in retirement, curbing spending on goods and services they can afford that would make their lives easier and more enjoyable. The so-called “retirement consumption gap” often stems from an inability to switch off a saving mindset and fears of running out of money, especially as the cost of living rises and people live longer.

Key things to consider before relocating in retirement

The likelihood of moving jurisdictions within Canada doubles at retirement, according to a study released in 2022 by Memorial University of Newfoundland associate professor of economics Derek Messacar. “For example, Canadians who move to large urban centres when they’re young may decide to move back home [to] another province or territory to retire near family,” he writes. The study shows British Columbia and the Atlantic provinces were net recipients of retirees from other provinces while other jurisdictions lost retirees.

How retirees can make up for an income shortfall if they’re unable to work

When retirement planning projections show that a client will come up short of their goal, Scott Sather, president and CFP at Awaken Wealth Management Ltd. in Regina, discusses four ways to meet those goals – save more, earn more, wait, or take less. Earning more is the option that always looks good on paper, allowing retirement savings or pensions to grow for a few more years while clients keep working.

The top surprises – good and bad – new retirees face

More than 90 per cent of Canadians with a written financial plan say they feel financially prepared for retirement, according to the recent 2023 Fidelity Retirement Report. Yet, only 85 per cent report being emotionally prepared for it. The findings suggest all the planning in the world cannot prepare retirees for the mental shock of retirement. David Driscoll, president and CEO at Liberty International Investment Management in Toronto, says the dramatic shift leaves many reeling. “The first year is one of transition. It’s usually the most difficult because you have to find activities that give your life purpose.”

How Canadians who face sudden retirement should prepare for the transition

For some retirees, leaving the workforce isn’t a choice. Some are forced into retirement due to a layoff, illness, or because they have to take care of a loved one – and returning to work isn’t an option. Being “suddenly retired” brings financial and emotional challenges, says Laurel Marie Hickey, portfolio manager and wealth advisor with National Bank Financial Wealth Management in Calgary. “Many people are nervous about retirement to begin with, so when it’s sudden, it brings that uncertainty to the forefront,” she says.

Why more seniors are opting to stay put rather than downsize their homes

Advisors are seeing more senior clients opting to stay put in their long-time homes instead of downsizing to a smaller house or apartment condo setup. Some clients are stymied by the process of buying and selling property, moving, land transfer fees and, of course, downsizing furniture and other household items. “A lot of our clients are either not planning to downsize, or if they originally planned on it, they don’t end up doing it,” says Chris Ferris, CFP at Ryan Lamontagne Inc. in Ottawa.

How tontines can reduce longevity risk in retirement portfolios

One of the most interesting tools for retirement and longevity planning to come about in decades – the tontine – has seen a significant re-emergence in Canada during the past two years. This product is very old in concept, dating back more than 500 years, but has not been seen in over a century. However, despite this new, yet old, innovation in the marketplace, there’s still some question about how to best use these products to meet their intended purpose – giving clients the best probability of not outliving their money.

Delaying CPP to age 70? Tips to withdraw other retirement income tax efficiently until then

Most Canadians are advised to delay their CPP and Old Age Security benefits to age 70, if possible, but are left with the question of how to withdraw other retirement income tax efficiently until then. For more straightforward portfolios, the advice is often to start taking money out of non-registered accounts first and leave funds inside registered retirement savings plans, registered retirement income funds or tax-free savings accounts because of their tax advantages. However, the strategy may be more nuanced if the investor has other sources of taxable income or a major one-time expense.

How the financial independence, retire early movement has evolved amid rising costs and volatile markets

When the financial independence, retire early (FIRE) movement went mainstream more than 30 years ago, it was a relatively straightforward strategy of saving and investing aggressively to leave the workforce decades earlier than most. However, rising costs, volatile markets, longer lifespans and the health concerns that can come with too much idle time have led to a few FIRE movement spin-offs that better reflect current economic and social realities.

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