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The usual age to retire is 65 in Canada, however in case you’re in good well being and anticipating to reside a protracted life, you might wish to take into account deferring Canada Pension Plan, says a monetary planner.
You can begin CPP as early as age 60 or as late as 70, however the longer you wait, the upper your month-to-month profit might be since they may cowl fewer years, says Jason Heath, managing director of Goal Monetary Companions Inc.
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“Usually talking, in case you reside effectively into your 80s, you’ll be able to come out forward by deferring your CPP to age 70. The issue? No one does it,” Heath mentioned.
Heath, a fee-only, advice-only licensed monetary planner and Monetary Submit columnist, lately spoke with FP’s Larysa Harapyn about different methods for retirement.
Regardless of the advantages, solely 5 per cent of CPP candidates waited till the age of 70 in 2022, he mentioned.
Probably the most profitable retirees Heath has seen are those that have transitioned to retirement by means of part-time, consulting or volunteer work, avoiding the acute change from a 40 to 50-hour work week.
“The sooner you begin to plan retirement, not solely from a monetary perspective, however from a way of life perspective, might be actually rewarding and enhance the transition,” Heath mentioned. “In an ideal world, it’s deliberate, it’s gradual, it’s regular.”
Heath acknowledged that some folks don’t have a selection, whether or not that’s due to severance packages within the company world or well being points that result in a sudden retirement. “Demise and retirement aren’t meant to go collectively … however actual life tends to work slightly otherwise,” he mentioned.
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Expat locations for retirement are an possibility for Canadians making an attempt to save cash on the price of dwelling. Heath mentioned there’s alternative in nations resembling Panama, Ecuador, Costa Rica and Mexico which try to draw retirees from different nations. A few of the advantages embody decrease actual property costs, meals prices and simpler journey to unique areas.
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For many who want to remain nearer to dwelling, tapping into your property fairness by downsizing or borrowing towards your property are choices in the suitable circumstances, notably for individuals who reside in massive cities the place dwelling costs are larger.
“If it buys someone 5 extra years of their dwelling, for instance, borrowing towards that worth earlier than they promote it, I don’t assume it’s a nasty factor,” mentioned Heath.
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