How to Make the Transition Toward Retirement?

It is not necessary to completely stop working to retire. There are several ways to make the transition toward retirement. Take the time to think about it to find the right one for you.

If you are in a relationship, do you want to stop working at the same time, before or after your partner? It can be unsettling to suddenly find yourselves together all the time at home. On the contrary, maybe you will have difficulty accepting that your partner is no longer working, but you, yes.

Here are three frequent ways to retire:

1. Completely stop working

Having all your free time is tempting, but it can also be disconcerting if you did not plan how you will spend your days. Work gives us a purpose and self-worth. Ask yourself what will fulfill those needs when you retire. Stopping all at once also means that you will have to replace all your employment earnings by retirement income, such as: 

• your Old Age Security (OAS) pension from the Government of Canada;
• your pension under the Québec Pension Plan (QPP);
• your workplace pension;
• your savings.  

But be careful: it is not because you are no longer earning an employment income that you should use all your sources of income at the same time. There are different strategies to manage all that and get the most out of it. Consult the What is a withdrawal plan? web page to get a clearer picture.

2. Choosing another job

Are you fed up with your job, but not necessarily with working? You could end your career with a job that interests you, but for which you would earn less. You could compensate the reduction in salary by withdrawing some of your retirement savings. You would be doing something that interests you while maintaining employment earnings. But, if you can, avoid applying for your pension under the QPP too soon. You would have a lower pension for life, and that may not be to your advantage. You will probably need more savings in total. For more information, consult the Do you need to save less if you apply for your pension later? web page.

3. Reducing your working hours

If you can afford it with your budget and your job, you could experience a smooth transition between work and retirement. You could even continue to contribute to the QPP to maximize the pension you will receive. If necessary, to compensate for the decrease in income, you could withdraw some of your retirement savings. If you have a workplace pension plan, verify whether reducing your working hours has an impact on the retirement pension you will receive.  

In any case, do not hesitate to obtain advice from a professional, or from a financial advisor. According to your situation, one way of making the transition toward retirement could be to your advantage rather than another one.