With tight economic times and dwindling bank balances, retirement may not seem as idyllic these days. How can you adapt to this new financial environment and still make the most of your retirement?
Chartered Accountant Giovanni (John) Roma, Partner, Miles & Roma Professional Corporation in Windsor advises retirees to revisit their financial plans, especially if their income has changed significantly.
“Make sure your plan still works for you. The current downturn has thrown a kibosh into the finances of many retirees, so be proactive and go back to the drawing board. Yesterday’s financial plan is no longer the plan for today, and it probably won’t be the plan for tomorrow.”
Roma offers these ideas to help keep you on track financially:
Adopt the simple formula followed by previous generations – money in, money out. When you have the money in your pocket, spend only what you can afford to spend, and avoid the use of credit.
Regroup and re-budget. Identify any discretionary expenses, and prioritize your needs and wants.
Run a reality check on both your lifestyle and your expectations of that lifestyle. What can you afford to do? Are your expectations realistic?
Based on your revised budget and your lifestyle expectations, make one of two choices: either downsize to fit your income by cutting back on your discretionary expenses, or supplement your income.
If you decide to downsize, consider selling the family home and/or relocating to another city or town that has a cheaper cost of living.
If you decide to supplement your income by returning to work, be positive about this new adventure. Prepare a resume, focusing on your strengths and career accomplishments. Employers often prefer to hire retirees given their proven track records, commitment and desire to work. Plus, a small incentive exists for employers: they are exempted from paying the employer portion of Canada Pension Plan (CPP) payments for employees who are already collecting CPP.
Consult your financial planner or investment professional, and ask questions about financial strategies. Is it time to reinvest? Should you reinvest more conservatively? Are there tax consequences if you decide to sell investments now?
Use your experience in the current economic downturn as a lesson and wake-up call for your adult children. Do they have savings plans in place for the future
The Institute of Chartered Accountants of Ontario is the qualifying and regulatory body of Ontario’s 33,000 Chartered Accountants and 5,000 CA students. Since 1879, the Institute has protected the public interest through the CA profession’s high standards of qualification and the enforcement of its rules of professional conduct. The Institute works in partnership with the other provincial Institutes of Chartered Accountants and the Canadian Institute of Chartered Accountants to provide national standards and programs that are used as examples around the world. </em>
