One of the most stressful aspects when retiring, for anyone, is making the transition. One day you’re working, the next you’re not. One week you’re getting a paycheque from your employer, the next you’re not. Lining up your finances to make that transition a smooth one can be challenging. Here are some helpful pointers for starting your retirement without money stress:
Have an Emergency Fund
When it comes to setting up your retirement incomes, there is only one way to do it right and 100 ways things can go wrong! You can be dealing with government agencies, pension companies, investment companies, financial advisors, banks, your former employer and more. With a lot of potential for human error or delays of bureaucracy, there is a high probability of experiencing at least one hiccup in processing your requests.
If you start retirement and can’t afford the pension company to be two weeks behind in processing, or you can’t afford your bank to put a hold on a cheque for three days, you will naturally be stressed out!
Try aiming for your first month or two of expenses to be covered by the funds in your chequing or savings account. This will give you ample time and breathing room should you run into trouble getting a particular income source online in time.
Start Early
When retiring, don’t expect to make the transition with only a few weeks’ notice! I often recommend giving your employer a bare minimum of three months’ notice so the HR department can get the ball rolling. Be sure to check your employment agreement to determine if even more advanced notice is required!
If you’re applying for Canada Pension Plan benefits or Old Age Security, those departments recommend at least a month’s notice. For investment accounts, like LIFs, RRIFs, or Annuities, you should have the paperwork done at least a month before you need your first income payment.
Go Digital Where Possible
Having paper copies of applications can feel more secure for some but comes at a cost of timeliness. Not only is physical time required for Canada Post to get your documents where they need to go, many institutions have adapted to processing electronic forms significantly faster (and with less chance for human error).
For government benefits, like CPP & OAS, you can apply online through your My Service Canada Account. For many financial institutions, like banks, pension companies, or investment firms, digital applications can be sent over secure email or via portals. Using digital tools can help buy you time and improve the accuracy of your requests!
My last piece of advice is to start by getting organized. If you go into your final working months with a game plan for the transition weeks, you’ve already won the battle! So if you’re looking forward to making the retirement transition in the near future, be sure to plan ahead, start early and leverage technology where possible.
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