Questions to Ask When Planning Retirement and Tips for Dealing With Them

Key Takeaways

  • Your personal situation and long-term goals and needs impact the answers to many retirement questions.
  • Retirement planning is an ongoing process—as your circumstances change, you may need to adjust your savings rate, spending, asset allocation and more.
  • Meeting your income needs as a retiree requires an understanding of your investment time horizon, inflation, appropriate asset allocation, expected pension and more.

Have you run across questions when looking into retirement planning? Determining if, how and when you can retire is not always easy for investors. Your retirement planning strategy should take into account your long-term goals and needs—and your personal situation may look different than other investors. Some investors’ situations can be complex. It may be easy to overlook important factors that affect how and when you can retire.

As you go through your plan to retire, keep some of these questions and retirement tips in mind.

Retirement Planning Questions

  • How long will I need my retirement savings to last?
    • Your investment time horizon is how long you need your money to provide for you. This timeframe depends on your personal circumstances. You may have an entirely different investment time horizon than another retiree of the same age. It may be your life expectancy or that of a spouse or dependants. If you have a spouse or dependents to support, consider how long the money may need to provide for them.
    • When evaluating how long you may need your savings to last after retiring, consider that you could live longer than you expect. Planning for a longer retirement may be smart—you don’t want to run out of money after retiring.
  • What should my asset allocation be?
    • Asset allocation is the mix of socks, bonds, cash or other securities in your portfolio. We believe selecting an appropriate asset allocation is one of the most important decisions in reaching your long-term investment goals. To determine the best asset allocation for your needs, some considerations include growth and cash flow needs, age, investment time horizon, and goals for your portfolio. Cookie-cutter rules of thumb about asset allocation and age are not necessarily the most appropriate for your situation.
  • Will my pension provide enough retirement income?
    • Qualified individuals may be able to receive the Canada Pension Plan or the Quebec Pension Plan at retirement age. The amount you receive can depend on multiple factors, including your age, how much you contributed and how long you contributed. Check out the Government of Canada’s website to learn more.[i] Depending on your expected benefit and expected retirement needs, you may need to plan for additional retirement funding.
  • What type of investment account should I use?
    • There are several account types and savings plan types that may be available to you. Deciding which to use may depend on your individual circumstances and eligibility. Here are some of the common account types:
      • Registered Retirement Savings Plan (RRSP)
        • These retirement savings plans are available to qualified Canadian workers. They can potentially provide tax relief on contributions.[ii]
      • Tax-Free Savings Account
        • This account type is available for individuals 18 and older with valid social insurance numbers. Within the contribution limit, individuals may receive tax benefits.[iii]
      • Registered Retirement Income Fund (RRIF)
        • These arrangements pays out income to an individual after they have rolled over money (potentially from an RRSP) into the fund.
  • How do I avoid running out of money in retirement?
    • Start by estimating how much your retirement will cost and how you currently plan to pay for it. You may be expecting  pension payments or income from a retirement plan or account.
    • Don’t overlook the impact of inflation when estimating costs. If inflation increases, it decreases purchasing power. The amount of money that meets your needs now may not be enough in the future if inflation rises. If you need investments to help you pay for retirement, make sure you are selecting the appropriate asset allocation for your investment growth needs.
  • What if I need more retirement income?
    • You may find that some adjustments are needed in order to meet your needs throughout retirement. Consider that your government pension could be affected by your age—your monthly payment amount could increase each month you delay taking it after the normal retirement age—up until age 70.[iv]
    • You may also consider reducing your spending. You may not be able to reduce spending on non-discretionary costs, such has food or taxes, but you can adjust discretionary spending. Travel or entertainment costs are example of nonessential expenses. You may also consider working in retirement—potentially part time to supplement your other retirement income.
  • Do I need to plan for a spouse or other dependents as well?
    • Will your retirement funds need to provide for only you, or do you have a spouse or dependants that also depend on this money? Consider that your retirement funds may need to provide beyond your own life expectancy—for example, perhaps you have a younger spouse who depends on this income. These factors can affect your asset allocation and planning needs—don’t overlook them.
  • Should I seek professional advice?
    • Getting another opinion or assessment of your retirement plan can be helpful. The right experienced financial professional could help you on your retirement planning journey and throughout retirement. Before taking a professional’s advice, be sure that you’ve vetted them carefully and they have the expertise, experience and service level that’s appropriate for you.
  • Where will I retire?
    • If you are considering moving abroad or traveling after retirement, don’t overlook how that can affect your retirement planning. Insurance, pension benefits and taxes may be affected depending on how much time you are spending outside of Canada. Check out the Government of Canada’s website to learn more.[v]

Additional Retirement Tips

These questions can provide a good starting point when planning how you will retire. Here are some additional tips that may help you whether you are at the beginning of the planning process or already a retiree.

  • Consider your long-term care plan: Paying for home care can be expensive. Long-term care insurance may or may not be right for you.
  • Review your asset allocation on a regular basis, and understand how changes to your time horizon may affect it.
  • Consider how you will support your family. Will you be helping out your adult children with expenses? What about grandchildren?
  • Evaluate your savings rate. If you haven’t yet retired, you should know if your savings rate is on track or not. If you’ve already retired, keep track of your spending to see if aligns with a sustainable rate of income withdrawal from your accounts.

Contact Fisher Investments Canada Today to Learn More

Do you have additional retirement questions? Or concerns about how to answer these questions? Fisher Investments Canada may be able to help. We have helped many investors throughout the retirement planning process. Contact us today or download one of our educational guides to learn more.

[i] Source: Government of Canada, as of 6/17/2019.  https://www.canada.ca/en/services/benefits/publicpensions/cpp/retirement-income-calculator.html

[ii] Source: Government of Canada, as of 6/17/2019. https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/registered-retirement-savings-plan-rrsp.html

[iii] Source: Government of Canada, as of 6/17/2019. https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/tax-free-savings-account.html

[iv] Source: Government of Canada, as of 6/17/2019. https://www.canada.ca/en/services/benefits/publicpensions/cpp/cpp-benefit/amount.html

[v] Source: Government of Canada, as of 6/17/2019. https://www.canada.ca/en/financial-consumer-agency/services/retirement-planning/travel-abroad-retire.html

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