Eight New Years’ Resolutions for Baby Boomer and Pre-Retirees

Happy 2019! In the spirit of the New Year, here are eight resolutions that are especially important for Baby Boomers and workers who are within five years of retirement:

1. Resolve to envision your ideal retirement.

Everyone has different ideas about how they want to spend their retirement. Some things to consider:

Will you stop working for good or will you work part-time to keep your skills sharp?
Will you use your newfound free time to travel frequently, take up new hobbies, or attend educational classes?
Will you relocate to another city or country?
Will you downsize or buy a second home?

If you’re married and your spouse also works, will they retire with you, or continue working?

2. Resolve to pay off your credit cards and your mortgage before you retire.

The number of Baby Boomers declaring bankruptcy has tripled in the last 25 years and 44% of retirees between 60 and 70 are still making mortgage payments. Debt repayments can quickly eat into retirement income. If you have significant levels of credit card debt or a large mortgage, consider delaying retirement until after you pay the debt down.

3. Resolve to determine your Canada Pension Plan (CPP) strategy.

Will you start claiming CPP as early as possible (age 60), or will you wait until 70 to maximize your benefit? You don’t need to start taking CPP when you retire. In fact, it may be advantageous to wait if you don’t need the income. If you start taking your benefits before age 65, your benefit amount will be reduced. Everyone has a unique situation and there is no “one-size-fits-all” when it comes to CPP.

4. Resolve to reassess your investment allocation.

Since February 2018, the stock market has been bumpy – and the volatility is expected to continue in the New Year. If you’re an older business owner or a retiree, you don’t have the luxury of time o make up for any big swings in the value of your retirement savings, so it’s especially important to ensure your investment allocation aligns with your time horizon and your risk tolerance. If market volatility is still making you antsy even though your allocation looks good, make sure you are 100% confident that your plan can withstand the potential losses.

5. Resolve to maximize your retirement income while minimizing your tax bill.

Many investments have a wide variety of tax treatments.  Some are most suitable for tax deferred accounts, such as TFSAs and RRSPs, and some are best for non-registered or corporate accounts.  Make sure you have this allocated properly to pay the least amount of tax.

6. Resolve to understand the insurance you are carrying and it’s purpose

Throughout the years I have seen many people sold insurance policies that are not appropriate.  In many instances these policies generate the highest commissions for the salesperson.  Make sure that there is a definite need for the coverage.  If an insurance policy is promoted to you as a great investment solution, get a 2nd, 3rd, or even 4th opinion to make sure you are considering the right things.

7. Resolve to review all important legal and financial documents.

Make sure documents like your will, insurance policies, corporate documents, and current investment statements are up to date and kept in a safe place.  Carefully consider your choice of executor and power of attorney.

8. Resolve to consult a financial advisor.

Even if you prefer to work without an advisor, you may benefit from a meeting or two with one ahead of retiring as they may bring up some aspect of retirement planning you hadn’t considered or ideas that you find worth trying.  This resolution is probably the easiest one to stick to ­– all you have to do get started is click here to request a free consultation.

Wishing you a happy, healthy, and prosperous New Year!