You’ll need more than you think

What’s your vision of retirement? Does it include home improvements, travel and spending time with grandchildren?

Do you feel you will have too much time on your hands? In talking with retirees, they are busier than ever. They wonder how they ever had time to work.

With each day filled up doing different things, you will also spend money differently. You may take more short trips to visit family and friends. You may go out for lunch, or shop more. Hobbies, renovations and travel all cost money.

In retirement, you need regular income and a ‘pot of gold’ which is your savings and investments. Your retirement monthly income will replace your working income. Your pot of gold will be for the one time or large purchases. For example, you want to take a European river cruise or renovate your kitchen. The funds for these large vacations or one-time purchases are more easily drawn from your pot of gold.

In this article, we review sources of regular income in retirement. RRSP to RRIF While working, you contributed to an RRSP. Now in retirement, you can convert this RRSP to a RRIF or annuity to create a regular income.

This can be done either in your 60s when you retire or, at the latest, in the year in which you turn age 71.

There are many benefits to annuities. This includes dependable income for you and your spouse and no investment management. Annuities are dependent on current interest rates, and with rates so low, they are not as favourable.

With a RRIF, you can keep your funds invested similar to an RRSP. You can choose to have your RRIF pay you a monthly, quarterly, semi-annual or annual income. Pension If you worked at a municipal, provincial or federal government office or a workplace that had a company pension, you may receive a regular monthly pension income from this. Non Registered Savings Your savings can create regular income if you wish. It is called SWP or Systematic Withdrawal Program. Every month, your investment account will withdraw a certain amount and send it to your bank or chequing account. The Canadian Pension Plan CPP pays a monthly income to those who contributed during their working years. The amount you earn is based on how much and how long you contributed to the CPP at the time you apply.

CPP does not start automatically. You must apply for it. You must be at least a month past your 59th birthday, have contributed to the CPP and want your retirement payments to start within the next 11 months.

In 2013, the average monthly income was $596 (taken at age 65) and the maximum amount was $1,012.

CPP can start as early as age 60 (with a decrease in pension) or delayed as late as age 70. Old Age Security There are three types of benefits under this pension: Guaranteed Income Supplement, Allowance and Allowance for the Survivor. Under this program, monthly payments are available to most Canadians over the age of 65.

You must apply for OAS and meet the Canadian legal status and residence requirements. Employment history and contribution is not a factor in determining eligibility. You can receive OAS if you have never worked or are still working

Changes to the date of eligibility will begin in April 2023 and will affect those who were born in 1958 or later.

Prior to retirement, get your ducks in order with a regular monthly income and a pot of gold.

Then travel, visit, renovate to your heart and wallet’s content.