Your retirement years should be an opportunity to pursue new goals, reactivate life-long interests and spend time with loved ones. Here are some tips to help you manage your finances effectively in this stage of life:
- Revise your budget to reflect your changing circumstances:
- Did you need a certain type of clothing for work? If so, you can now reduce your clothing budget. Similarly, your transit costs will likely drop significantly.
- Keep in mind that your living costs could increase in later years with medical expenses, a retirement home or facility, and caregiver costs, so it is important to make your money last as long as possible.
- As in all stages of life, separate “needs” from “wants”. Once you have budgeted for your needs, find a good balance between spending on items that are not necessary and saving your money for the future.
- Stick to your plan. Be careful about spending money on items that are not in your budget.
- If you have money saved in more than one place (for example, an RRSP, TFSA and bank account), get some advice about where to withdraw money from first. Talk to your financial or tax advisor about when to apply for CPP, Old Age Security and your options for drawing on any company pension plans you’re eligible for.
If someone approaches you about an investment, be sure to check with a trusted financial advisor first. Avoid signing anything before you read it. If it sounds too good to be true, it probably is. Learn more about investment fraud and how to avoid it.
Being aware of potential pitfalls will allow you to plan accordingly so that you can make the most out of your retirement.