Money Matters for Retirees

By Jeremy Grant

Whether we care to admit or not, money does make the world turn. We spend decades in careers or building businesses to earn money to care for our families, take vacations, make our homes, and do other things we want. Eventually, responsibilities evolve to that of retirement and how to care for you and your spouse when you reach that golden age. Many of us dream of spending our days on the golf course, traveling, or taking up long-abandoned hobbies. You may get to retirement age and discover you do not have adequate income to do all that you dream of, or you may not understand the nuances of living off a fixed income. Retirees and their caregivers benefit from knowing more about financial matters, making other important aspects of life, such as aging in place, much more accessible and manageable.

It’s Never Too Late to Gain Control Over Your Finances

From your first piggy bank to your investment accounts, you have made money management decisions through life. Yet, it is possible you may not fully understand what you need to know as you enter retirement. Now is the best time to brush up on financial literacy, learn to protect your money, consider taking out a reverse mortgage, and find ways to save on taxes.

1. Why Financial Matters Matter in Retirement

Many Canadians believe they understand personal finances. However, confidence in the belief is not the same as practice. Saving for retirement may take the backseat to debt, primarily because we do not understand all the facets of our finances and how they will apply to us further down the road.

By learning more about your financial matters, you can make better decisions that ensure you have a comfortable retirement to look forward to. Consider these reasons to become better acquainted with financial literacy:

You can better stay on top of changes. For decades, we all wrote cheques. Now, you can use a debit card, payment services like PayPal, and pay bills online or with your smartphone. It can be overwhelming not to understand the changes in payment mechanisms.
You can pick up where your spouse left off. Most relationships have one partner handling all the finances. When that person dies, the widowed party is left fending for themselves. Understanding financial matters helps make sure bills get paid on time, and any investments grow profitably.
You learn to manage retirement income. When you retire, you lose the regular income you had available when you worked. The income you have in retirement is different and requires different skills and resources to manage efficiently.

2. Protecting Your Money after Retirement

Heading into retirement is an exciting time. Soon, you can kick your alarm clock to the curb and dally over a cup of coffee each morning. We may all have grand ideas about how our golden years will look, but reality may be otherwise. It’s imperative to protect your money after retirement. You or your loved one should become aware of these options:

Power of Attorney: If you or your senior parent can no longer handle their finances, a power of attorney may be the way to go.
Simplify Processes: Keeping track of outgoings is a little easier if things are paid automatically or are due about the same time each month.
Keep an Eye Out for Scams: The elderly are easy prey for cyber thugs. Being aware of new scams helps all involved—you and your family.
Have a Checks and Balances System: It is a good idea to have someone keeping an eye on an aging loved one’s finances. It helps keep down the potential for financial abuse.
Consider Converting Assets into Income: With the help of a financial planner, it may be possible to convert savings into annuities or take out a reverse mortgage.

3. Why Consider a Reverse Mortgage During Retirement

One fact about retirement is that your income opportunities are different. You may still work part-time, but that income only serves to supplement funds from RRSPs, TFSAs, GIS, or OAS. It is generally fixed, requiring you to keep close tabs on your money. A reverse mortgage may help you enjoy more of your retirement years and ease up your tight budget by adding some cushion. Here is why you should consider if a reverse mortgage is a good option for you:

Pay Off High-Interest Debt: Heading into retirement with a large amount of high-interest debt can put a burden on your budget.
Consolidate Debt: Having all your debts rolled into one payment, not just high-interest debts, help simplify your finances.
Make Repairs or Renovations: You may be in a good place financially but cannot reasonably afford to make some needed home repairs. A reverse mortgage may be able to help with that.
Boost Your Retirement Income: You may want some peace of mind that you will have funds available if you need them. That becomes possible with a reverse mortgage.

4. Tax Saving Tips for Retirees

Death and taxes are two absolutes in the universe. We will all eventually pass from this life, but we do not have to pay the highest taxes while we are living. Utilizing some practical tips, you can save on taxes when you are making the least amount of income. Here are a few ideas to ask your financial advisor about:

Pension Splitting: You may be able to reduce taxes by transferring some pension income from the higher earner to the lower earner.
Withdraw Income in the Right Order: Instead of focusing on making withdrawals from accounts that are not tax-deferred first, consider how much you have and where they are held. It may look much different than you think.
Utilize T-Series Funds: You may benefit from the tax efficiency found with T-series funds and enjoy a predictable and sustainable cash flow.

You may also be interested in Tax Saving Strategies for Retirees | Managing Your Finances as a Senior Citizen | Tax Credits for Canadian Seniors

Make the Wise Investment - Choose Home Instead

Part of retirement is remaining at home. The team of professionals at Home Instead in Etobicoke come alongside you or your elderly loved one and offer services to ensure aging in place is possible. We offer a variety of senior care services to aid in nutrition, companionship, and others. Hiring an experienced home health aide may be the best investment for retired living at home. Learn more about our home care services when you reach out to us today.

Call us at (416) 239-2200 to schedule a no-obligation, in-home consultation. Learn more about the compassionate, quality senior care we deliver, every day, to families in All Etobicoke including: Kingsway, Mimico, Long Branch, Islington, Richview, The Community of Humber Heights, Rexdale, Markland Woods

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