Your senior years can be a peaceful time when one is able to enjoy the fruits of one’s labours and take a well-deserved rest from maintaining a career. But this life stage also has its own set of challenging transitions which could include retirement, widowhood, and so on. Constraints with money should not be an added problem.
So whether you are reading this article for an elderly loved one, or you’re looking to secure your own finances during retirement, you’re at the right place.
In this article, we will cover useful senior financing tips. Let’s get started!
Preparing for Retirement
Here are some personal financing tips to help you financially prepare for your retirement.
1. Define Your Plans and Goals for Retirement in Advance
By setting goals and considering options early, it can keep you from running into unexpected surprises and will give you the chance to prepare. Consider having a conversation with your family about this. Likewise, if you are the adult child of an older parent approaching retirement, you can initiate this conversation early so that you have ample amount of time to prepare.
2. Stow Money Away in an RRSP
RRSP or a Registered Retirement Savings Plan is a retirement account that helps Canadian citizens save up for retirement. With the years you have left before retirement, consider putting more into your RRSP as this can help you later on.
3. Learn About Investments
Investments are a good source of passive income. You can look into investment options like bonds, dividend stocks, and guaranteed investment certificates. These options have different levels of risk but generally, the earlier you start, the more likely you will have a higher yield.
4. Learn All About Government Pensions Available
Make sure that you are aware of how pensions work. You can also decide early on when you will start taking CPP (Canada Pension Plan) and OAS (Old Age Security) benefits. You can also learn about the additional supplements to the OAS which include GIS (The Guaranteed Income Supplement), The Allowance, and Allowance for Survivor.
Managing Money During Retirement
Here are some senior financing tips that can help you or your older loved one to stay financially on track.
1. Have a Budget and Track Expenses
Limiting unnecessary expenses is a must. But this does not mean that you will no longer enjoy your retirement years. It’s just a matter of making sure that expenses don’t get out of hand. Typically, a senior person would have two sources of funds during retirement: their personal savings and their pension. Some would have extra funds coming in from investments, insurance, or other sources of passive income (e.g. rent.) Whatever the case, it’s important to set a budget to help you live within your means.
2. Streamline Your Finances
As much as possible, automate all sources of income so they go directly into your account. Likewise, you can also automate your bills. This will help you to save a lot of time and effort. If you haven’t yet, learn about online banking so you can check your funds when you need to. If any of this becomes confusing, make sure to enlist the help of a trusted individual or family member.
3. Set Up a Power of Attorney
This step can give you and your family peace of mind. A power of attorney allows a family member to manage your financial affairs on your behalf in the event that you are unable to do it yourself. This can be temporary such as if you get into a minor accident. It can also be ongoing such as if cognitive decline sets in.
4. Use Cards – But Have Safeguards Against Fraud
Money kept at home or carried around can be stolen or lost. Therefore, it’s advisable to keep money in the bank where it can be safe and to use debit/credit cards for transactions. Banks and card issuers will be able to decline any suspicious transactions.
However, older adults are at a high risk of being victims of online financial fraud. That’s why it’s important to arrange for family members to receive alerts if suspiciously large and/or unscheduled withdrawals are made from your account. Additionally, be aware to never give credit card information over the phone or through email.
5. Consider Generating Side Income
If you’ve just begun your retirement, it could be a good time to start investing and making money work for you. Make sure to consider all options before investing and don’t hesitate to ask for help if needed.
Another way to generate passive income is to rent your primary home. However, keep in mind that being a landlord carries its own duties and responsibilities such as making sure the property is well maintained, getting tenants, and screening tenants properly.
Whether you are planning your retirement or that of your elderly loved one, different options have different benefits and costs associated. If you seek to make a solid plan with the resources that you have, our retirement consultants here at Your Next Steps Inc. will be able to help! Contact us today and let’s get started!