1. Start picturing your retirement

Your spending habits and expenses may be different from before you retired. Ask yourself questions like where you’ll be living, how you’ll be spending your time, and whether you’ll continue to work. Would you want to downsize to a smaller home and use the equity to travel? Is a cottage on your wish list? Will you spend more time and money on hobbies? Consider your day-to-day expenses and how other activities will impact your cost of living. It’s important to review your budget regularly as your needs change. Once you know the estimated cost of your retirement, the next step is to review your income sources.

2. Review your retirement income sources

3. How to build your personal retirement savings

Hint: Contribute early and regularly to your retirement savings

By contributing early and regularly to your retirement savings, you build a nest egg that can provide financial security in your later years. Retirement may seem far off when you’re in your 20s or 30s, but the earlier you start saving, the easier it will be to reach your retirement goals. Even if you’re in your 40s or 50s, it’s never too late to start contributing. Take advantage of different investment accounts such as Tax Free Savings Accounts (TFSA), Registered Retirement Savings Plans (RRSP), Locked-In Retirement Accounts (LIRA), or non-registered accounts. Which account is right for you depends on your financial and tax situation.

4. Consider pension income splitting with your spouse

Income splitting can occur before retirement, through spousal RRSPs, or in retirement through splitting a pension. In a spousal RRSP, the higher-income earner would contribute to the RRSP of the lower-income spouse within their available contribution limit. This transaction can result in a lower overall tax rate for the couple, as the higher-income spouse would receive a deduction for tax purposes in the year of contribution. Later, when the funds are withdrawn from the lower-income spouse’s RRSP, the tax obligation on the RRSP withdrawal may be lower as it is taxed at the lower-income spouse’s tax rate. To see if income splitting makes sense for you, how to take advantage of it, and to hear further rules regarding income splitting strategies, speak to a professional.

5. Converting your savings into income

If you are at least 55 years of age, consider converting a portion of your Registered Retirement Savings Plan (RRSP) to a RRIF (if you do not already have a RRIF). If you have a Locked-In Retirement Account (LIRA), it is time to consider unlocking options, including converting to a Life Income Fund (LIF). Ensure you research your income options and plan to have an income from the first day you retire.

If you still find it overwhelming, remember you’re not alone. At WFCU Credit Union and Aviso Wealth, our skilled representatives help you maximize your savings and investment strategies to make the most of your retirement.