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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 stay a protracted life, you might need 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 can be since they are going to cowl fewer years, says Jason Heath, managing director of Goal Monetary Companions Inc.
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“Typically talking, in case you stay nicely into your 80s, you may come out forward by deferring your CPP to age 70. The issue? No one does it,” Heath stated.
Heath, a fee-only, advice-only licensed monetary planner and Monetary Put up columnist, just lately spoke with FP’s Larysa Harapyn about alternative strategies for retirement.
Regardless of the advantages, solely 5 per cent of CPP candidates waited till the age of 70 in 2022, he stated.
Probably the most profitable retirees Heath has seen are those that have transitioned to retirement via 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, may be actually rewarding and enhance the transition,” Heath stated. “In an ideal world, it’s deliberate, it’s gradual, it’s regular.”
Heath acknowledged that some individuals 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. “Loss of life and retirement usually are not meant to go collectively … however actual life tends to work just a little in a different way,” he stated.
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Expat locations for retirement are an possibility for Canadians attempting to economize on the price of residing. Heath stated there’s alternative in nations corresponding to Panama, Ecuador, Costa Rica and Mexico which are attempting to draw retirees from different nations. A number of the advantages embody decrease actual property costs, meals prices and simpler journey to unique areas.
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For many who choose to remain nearer to house, tapping into your own home fairness by downsizing or borrowing in opposition to your own home are choices in the suitable circumstances, significantly for individuals who stay in huge cities the place home prices are higher.
“If it buys any individual 5 extra years of their house, for instance, borrowing in opposition to that worth earlier than they promote it, I don’t assume it’s a nasty factor,” stated Heath.
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