Retirement quick tips

You’ve reached the point when all your careful retirement saving pays off. While you enjoy the benefits of your hard work, continue to ensure you’re making sound decisions throughout your retirement. You may already have all your savings converted into a retirement income plan, or perhaps, if you are under age 71, you’ve decided to continue saving a portion in an RRSP. You may even have a TFSA or non-registered savings account. Here are some quick tips to get you started:

Review your beneficiaries. Look at who you’ve selected as beneficiaries for either savings or income plans, and make sure you’re still happy with your selection. Keep in mind that for most pension plans, your spouse is automatically your beneficiary, unless he or she signs a waiver. Also be aware that the definition of a spouse can vary from one province to another.

Understand the facts about tax. If you’re collecting income from pension payments, annuity payments, or interest from guaranteed investments, or making withdrawals from RRSPs, these will all be taxed as personal income. Dividends from Canadian corporations and capital gains generated in a non-registered savings plan will also be taxed, although at a lower rate than regular income. Income (interest and dividends) and capital gains are not taxable in a tax-free savings account (TFSA).

Consolidate for convenience. While you can have as many different investment vehicles in as many different financial institutions as you want, it can get pretty complicated. If you consolidate your investments with just one or two financial institutions, keeping track of your finances and budgeting will be a lot simpler.

Consider a reverse mortgage, an arrangement that allows you to tap into the equity you’ve built in your home. Instead of you making mortgage payments to a bank, the financial institution that holds your reverse mortgage makes payments to you. The amount you owe on the reverse mortgage grows over time as you receive more payments. When you die (or move out of the house), the house is sold and the proceeds are used to pay back the money you received, plus interest. What’s left, if anything, will go to your heirs.