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The usual age to retire is 65 in Canada, however should you’re in good well being and anticipating to dwell a protracted life, you could wish to take into account deferring Canada Pension Plan, says a monetary planner.
You can begin CPP as early as age 60 or as late as 70, however the longer you wait, the upper your month-to-month profit will probably be since they’ll cowl fewer years, says Jason Heath, managing director of Goal Monetary Companions Inc.
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“Typically talking, should you dwell effectively into your 80s, you possibly can come out forward by deferring your CPP to age 70. The issue? No person does it,” Heath mentioned.
Heath, a fee-only, advice-only licensed monetary planner and Monetary Put up columnist, just lately spoke with FP’s Larysa Harapyn about alternative strategies for retirement.
Regardless of the advantages, solely 5 per cent of CPP candidates waited till the age of 70 in 2022, he mentioned.
Essentially the most profitable retirees Heath has seen are those that have transitioned to retirement by way of part-time, consulting or volunteer work, avoiding the intense change from a 40 to 50-hour work week.
“The sooner you begin to plan retirement, not solely from a monetary perspective, however from a life-style perspective, could be actually rewarding and enhance the transition,” Heath mentioned. “In an ideal world, it’s deliberate, it’s sluggish, it’s regular.”
Heath acknowledged that some individuals don’t have a alternative, whether or not that’s due to severance packages within the company world or well being points that result in a sudden retirement. “Dying and retirement aren’t meant to go collectively … however actual life tends to work just a little in another way,” he mentioned.
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Expat locations for retirement are an choice for Canadians making an attempt to save cash on the price of dwelling. Heath mentioned there’s alternative in nations corresponding to Panama, Ecuador, Costa Rica and Mexico which try to draw retirees from different nations. A few of the advantages embody decrease actual property costs, meals prices and simpler journey to unique places.
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For many who desire to remain nearer to house, tapping into your private home fairness by downsizing or borrowing towards your private home are choices in the appropriate circumstances, significantly for many who dwell in massive cities the place home prices are higher.
“If it buys someone 5 extra years of their house, for instance, borrowing towards that worth earlier than they promote it, I don’t assume it’s a nasty factor,” mentioned Heath.
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