You need to correct the following errors :
Those two sources of income provide you with part of your total income, but do not cover all your needs. The remainder must be compensated with a pension from your workplace pension plan, if you have one, and your personal savings accumulated over the years. If necessary, income from a part-time job can help you.
For example, you could have low-risk investments that end at different times to cover your needs in the first years of retirement, such as bonds or guaranteed investment certificates. In the long term, you could have riskier investments that yield higher returns, while respecting your investor profile and protecting your investments against inflation. To do so, aim for a return that is higher than the increase in the cost of living.
The retirement pension under the QPP and the Old Age Security pension from the Government of Canada are indexed each year, which means that they increase according to the cost of living. This protects part of your retirement income against inflation. If you have a workplace pension plan, you can verify whether the planned pension is indexed. It could be indexed in part only.
When your savings are invested, for example in a guaranteed investment certificate, they are not quickly available. You cannot request an advance on your pension under the QPP or on your Old Age Security pension from the Government of Canada. To always have money available, there are two things you can do:
In financial simulations, it is often taken for granted that you should have enough money until age 95. Why is that? Because it is based on the population's life expectancy. In Québec, about one in four people will live to that age. You may live longer than you think! You can use the Life expectancy calculator based on various survival risks from the Institute of Financial Planning to estimate your life expectancy.
In most cases, it is more advantageous to wait until at least age 65 to receive your pension under the QPP. The pension increases if you wait before applying for it. Its amount is guaranteed for life and increases each year based on the cost of living.
Here are the main steps of a withdrawal plan:
If you are a member of your workplace pension plan, it is important to verify all those elements. This will allow you to know what you will receive when you retire. That way, you can better plan accordingly.
Often, certain expenses decrease, but others increase. In retirement, we have time to do what we enjoy, and in general, that costs money. They are not always big expenses like travelling, but rather expenses related to sports, outings, leisure activities, etc. Also, a lot of people take advantage of their free time to do renovations. Ideally, this should be planned for in a budget to avoid getting into debt in retirement. Unfortunately, as we age, we are more likely to need medical care or medications that are not always covered, or to have to move into a residence adapted to our needs. These products and services have costs that increase over time, and it is best to keep them in mind.
Try to estimate the expenses to see whether your budget for retirement makes sense. You will know whether the savings you have planned will be enough to support your lifestyle in retirement.
It is highly recommended to be prepared before retiring and to organize your finances and projects a few years before you decide to retire.
