How to transition to retirement

For years now, you’ve been stashing money away for retirement. You have a good sized RRSP. You have some money in a TFSA. You might even have a pension plan from your employer.

But now that retirement is on the horizon, you don’t feel ready. You still wonder “Am I going to be okay?”

Sound familiar?

If so, you’re not alone. Many Canadians nearing retirement feel the same way. So how do you transition to retirement with confidence?

I’m here to help. In this article, I’ll explain why you might feel a little anxious about retirement. Then I’ll give you an action plan to help you transition to retirement with confidence.

Let’s get started.

Get retirement ready

It’s normal to feel a little anxious when retirement approaches. Why? Because many people don’t realize that there are two distinct stages to retirement planning: accumulation and decumulation.

The first stage is accumulation, and it’s probably the easiest of the two. During the accumulation stage, you save as much as you can in an RRSP, TFSA, or pension plan. The objective is to accumulate assets for your retirement years.

There are lots of ways to accumulate assets for retirement. For example, you can make regular contributions to an RRSP, or you can setup a monthly deduction from your bank account. These simple methods make accumulating assets seem easy.

But the decumulation stage can be more challenging. The objective during the decumulation stage is to use the funds that you’ve accumulated to fund your retirement. It’s the time in life when you no longer earn a regular paycheck, and need to rely on your savings and pensions for income.

Also, Canadians are living longer than ever. So that means you’ll likely need to save more to support your retirement lifestyle. Imagining what life will look like in the next 20, 30 or even 40 years, and finding a way to fund that vision, can seem challenging.

So you need a plan. Which brings us to the next section.

The key to a happy transition to retirement

A retirement income plan will help you achieve a long and enjoyable retirement. Creating a plan involves setting realistic expectations about your savings and spending habits.

Not sure where to start? An independent financial advisor can help you focus on the things that matter the most to you. They can also help you adjust course, if your situation changes. Life happens after all. So having a flexible retirement income plan is important.

When retirement is on the horizon, there are several things you need to consider. According to Canada Life, here are the items you should focus when you get closer to retirement:

Three to five years before retirement:

• Estimate how much money you’ll get from the government and/or employers.
• Estimate your living expenses and lifestyle needs.
• Review your investment portfolio with your advisor to find out if you’re on the right track to achieve your goals.

One year before retirement:

• Confirm eligibility and amounts of retirement income from all sources.
• Review estate planning.
• Work with your advisor to put the finishing touches on your customized retirement program.

Six months out:

• Update your beneficiary information.
• Apply for government benefits.
• Apply for retirement income from your workplace plan.

You’ve worked hard to save for retirement. So you deserve to take the next step with confidence.

Get retirement ready. A trusted advisor can guide you through the transition from accumulation to decumulation. They can also create a flexible plan to help you manage your sources of retirement income.