4 Keys to Making Better Decisions About Retirement

by Jordan Blais

“When do I take my CPP?” “Should I start my OAS at 65?” “Should I take the monthly cheque or the lump sum from my pension?” “Which month should I hand my notice in?” These are just a few examples of the many questions that face retirees in Canada. The sheer volume and magnitude of retirement questions can seem daunting. What can be done to ensure better decision making when it comes to retirement finances?

1. Stay organized! It’s next to impossible to make a  decision and stick to it when you’re only looking at  part of the puzzle. If those other puzzle pieces have  been neatly filed away in the garbage bin, stuffed into  a shoebox, or left on a thumb drive you’ve long lost,  you’ll be in a heap of trouble. Keep files containing all  important documentation, like tax returns, notices of  assessment, investment and pension statements, and  mortgage statements. Having an organized system  going into a decision means you can reference any other  material at a moment’s notice. 

2. Put it ALL on paper. No one financial decision can  be made without impacting another. Something as  innocuous as a $100 RRSP contribution will: influence  your income tax bill today AND when you make a  redemption, takes away $100 that could’ve gone into  a TFSA or savings account or paid down debt, moves  the needle on your overall asset mix, and alters your  estate composition. Big decisions need to be made in  the context of all areas influenced. Start by creating a  personal balance sheet with your assets and liabilities,  then a budget for your cash flows as they exist today.  With this kind of information at your fingertips, you  can visualize how any decision will ripple through your  affairs.

3. Consult professionals. The bigger the decision, the  more likely you are to need one or more professionals in  your corner. You wouldn’t sell a business without talking  to your lawyer, accountant, financial security advisor,  and a business valuator, right? So why make a life changing decision like retirement without professional  guidance? When a decision is too important to be left up  to chance, or impossible to undo, make sure you have an  experienced team behind you. 

4. Keep emotions in check. You may have been picturing  the day you get to tell your boss you’re retiring for years.  If you have a bad day and tell them too early, you’re going  to regret that lapse in judgement! Conversely, don’t avoid  retiring on your terms due to an emotional reaction about  

how the stock market is going that day. Try to recognize  what is influencing your decisions and feel good about  questioning yourself. Are you taking CPP early because  your friend is doing it and you feel peer pressure? Or  are you doing it because you’ve carefully planned out  the pros and cons and calculated the net benefit to your  retirement plans? 

Before you commit to a decision you have to live with  for the rest of your life, take a moment to remember  these points. If you’re organized and have documented  your financial affairs, you’re in a great position to make  an informed decision. By consulting with experts and  checking yourself for emotional bias, you can be certain  you’ve made the right call for your family! This information is general in nature, and is intended for  informational purposes only. For specific situations you  should consult the appropriate legal, accounting or tax  advisor.