A credible survey done during Financial Literacy Month 2024 demonstrated that about 61% of Canadians worry about not having adequate savings in retirement. 55% of men and 66% of women aged 28 to 44 are more anxious about this. Almost 6 in 10 people suffer from daily financial stress due to inflation and affordability issues. All these factors led them to increase their retirement savings to C$900,000 in 2024. Are you also stressed? Retirement planning is a critical decision. Government-led financial support can be accessible only by age 65. However, retiring is not just about choosing an age. It must also align with your lifestyle considerations, finances, personal goals, etc.
Retirement age – When to retire?
Retirement planning isn’t one-size-fits-all—everyone’s lifestyle, health, and financial needs are unique. Consulting Aleph Retirement Planners or other recognized advisors can provide valuable insights into the implications of your choices while helping you craft a plan that aligns with your long-term objectives.
Typically, retiring between ages 55 and 60 is generally considered early retirement. While this offers more personal freedom, it also means a reduced Canada Pension Plan (CPP) income, increasing reliance on personal savings. Old Age Security (OAS) benefits become available at 65, and those who wait until this age can access full OAS and CPP benefits. This approach is ideal for individuals who have met their financial goals and want to maximize employer and government benefits for long-term stability.
For those willing to work beyond 65, higher CPP and OAS benefits become available, allowing for greater savings, a steady income, and an enhanced retirement lifestyle. However, this option is best suited for those who truly enjoy working and want to remain professionally active. Another approach is phased retirement, where individuals gradually transition from full-time work to part-time employment while receiving partial benefits.
Ultimately, the best retirement strategy is one that reflects your personal and financial circumstances. By carefully aligning your retirement goals with your needs and aspirations, you can create a plan that offers both security and fulfillment
Retirement benefits – What are the popular programs?
Canada Pension Plan (CPP) pays retirees every month per the contributions they made during their employment. CPP benefits can be obtained from age 60. However, you benefit more the longer you wait for it to start payments. People aged 65 and older get Old Age Security (OAS) benefits based on location and income. Low-income seniors with OAS benefits can also be eligible for Guaranteed Income Supplement (GIS).
You can also seek private pensions and savings plans besides government-run retirement programs. For example, a Registered Retirement Savings Plan allows you to make tax-deductible contributions to your savings account. You pay tax when you withdraw funds in retirement. Suppose your annual earnings are C$60,000. You move C$5,000 to RRSP. Your taxable income will be C$55,000. Your money will continue to grow in the account and be taxed during withdrawal. A Tax-Free Savings Account (TFSA) is another option. Your contributions are taxable, but withdrawals will be tax-free. Then, employers offer pension schemes, which can add to your retirement income depending on your contributions and service years.
These are just a few elements that can make your retirement planning reliable and successful. A professional retirement planner can guide you better by providing a 360-degree view. They can also discuss insurance, debt management, estate planning, cash flow, etc.
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