The 4 big retirement planning considerations

Stressed about stopping work? Forced into unplanned retirement? Anxiously awaiting retirement for years now? Are you ready? Retirement has come knocking at your door! To enjoy the full measure of happiness you deserve, here are four major considerations to look at that will help simplify the entire process.

People generally retire between 55 and 70 years of age. Depending on when you take the plunge, your pension may differ.

The Quebec Pension Plan (QPP) disburses retirement pension starting on your 60th birthday. However, the government does not force anyone to take their retirement pension at age 60.

To give you an idea of the maximum monthly QPP1 payment amounts^[1], here is an overview in numbers.

72 YEARS OLD: $2,276/month

If you request your QPP at age 72, you will receive even more per month, 158.8% of the pension (significant enhancement).

65 YEARS OLD: $1,433/month

If you request your QPP at age 65, you will receive about $1,433/month, or 100% of the pension.

60 YEARS OLD: $917/month

If you request your QPP at age 60*, you will receive just over $917/month, or 64% of the pension.

55 YEARS OLD: $0/month

If you request your QPP at age 55, you will receive $0/month, or 0% of the pension.

In reality, you earn 0,6% on your pensions every month until you turn 65. The government then guarantees you an annual increase of 7,2% on the amount owed to you until your 65 ^th birthday. If you wait until 72, the percentage increases significantly to 8.4% annually, starting from age 65.

What is my marital status?

Whether you are married, living common-law, divorced, widowed or single when you retire, your marital status can affect your income and pension.

Couples

It is not mandatory that you both have contributed to the QPP. You can split your retirement income between you and your spouse in order to reduce the tax you have to pay.

Divorced

If you got a divorce, legal separation or civil annulment of marriage, the work income that is registered in your name and that of your former spouse is shared automatically.

Widowed

You are entitled to a survivor's pension. The amount of this pension varies according to certain factors, such as the contributions your spouse made to the QPP, your age, the number of dependent children of the deceased, whether you are a disabled person and if you are already receiving a retirement or disability pension.

Single

If you are a single worker without dependent children, you will be asked to contribute to a government plan that, unfortunately, puts you at a disadvantage while benefitting couples and families.

Remember to write your will and complete your certificate of incapability if you didn't already do so when you purchased your home or when your child was born. It's not a pleasant thing to do but it's essential!

What will I spend as a retiree?

Expenses during retirement are usually lower than during working life. However, if you are planning expensive projects, such as a luxury trip, be sure to include them in your calculations^[2].

What are my earnings?

My capital

This is your legacy, the selling price of your home, the value of your investments, etc.

 

My savings

This is the money that you have in your bank accounts.

 

Public pension plans

These are all types of pensions (e.g. Old Age Security and Canada Pension Plan).

 

Quebec Pension Plan

RRSPs, RRIFs, TFSAs, etc. that are either managed by your bank and/or a pension fund.

How much do I need to maintain my current quality of life?

-50% of my current income

You will certainly have to tighten your belt but you could consider getting a part-time job or selling a property.

Between 50% and 70% of my current income

70% is a high percentage. However, you could live well without having to tighten your belt, unless you tend be be a big spender.

What options do I have if I want to earn more money in retirement?

If you would like to earn money while retired, you have tow options:

01Work part-time

More and more people are going back to work in retirement. This option will allow you to meet new people, pass on your knowledge to other generations and increase your self-worth.

02Sell a property

During retirement and sometimes a few years before, many people decide to sell their property. Whether you want to remain a home-owner or become a tenant, this is an important financial and lifestyle decision. Take a good amount of time to think about it.

In short, once you have thought these questions through, complete the relevant paperwork one at a time. The pre-retirement period is full of changes but by being well-prepared and following these tips, you will be equipped for a peaceful retirement. After all, retirement is all about happiness!

The FlexiFonds offering: retirement savings solutions

Are you looking to maximize or consolidate your retirement savings? The Fonds de solidarité FTQ has launched the FlexiFonds offering to meet your needs and support you throughout your retirement. Better yet, with these new products, you can continue to support Québec's economy! The FlexiFonds offering is the logical extension of your Fonds experience.

LEARN MORE ABOUT THE FLEXIFONDS OFFERING 

About FlexiFonds de solidarité FTQ
FlexiFonds de solidarité FTQ Inc. is a wholly-owned subsidiary of the Fonds de solidarité FTQ. FlexiFonds de solidarité FTQ Inc. acts as the principal distributor of the funds' units and is a mutual fund dealer registered with the Autorité des marchés financiers.