In the past, planning for retirement was a much more simple process which involved calculating how much income you would need to live comfortably until you died. These days, fewer and fewer people have pension plans where they work, and people are living longer, so people need to start planning much earlier for their retirement. This can involve real estate investments, RRSP’s, TFSA’s and many other products. According to Evelyn Jacks, people need to consider several factors in their pre retirement planning which are listed below:
A Longer Work Life:
That means more employment and self-employment earnings in retirement, which requires new ways of planning for RRSPs, TFSAs, CPP and OAS benefits.
Real Estate:
More wealth and/or more debt, especially for those with one or more residences.
Double Incomes:
The pension accumulations of two people can be subject to income splitting, an opportunity not available in previous generations.
Tax-free Accumulations:
Home equity, TFSAs, insurance for life and health all bring new wealth planning opportunities.
Retirement Readiness:
The Boomer male or female may be ready to retire, but the financial needs of others in the family may prohibit them from doing so (for example, they may still have to help put their kids through university, assist with the care and support of elderly relatives, or XXX). This may ring even truer for the Millennial generation, many of whom have pushed their childbearing years into their thirties.
More Minis:
Grandparents may have younger grandchildren than in previous generations, as Millennials have their children later; these new families may require continued support from grandparents, especially for housing and for education planning for children.
Inheritances:
There will be a significant transfer of wealth both to the Boomers and from the Boomers to the next generation. These pools of capital need to be invested responsibly at a time when financial literacy is significantly lacking and trust tax rules are changing.
Potential Conflict:
Family complexities—including blended families and family members that are spread afar in a mobile, global economy—make planning with multiple stakeholders difficult.
Higher Taxation:
The high tax rates that Boomers and their families face are unprecedented, on both income and capital, particularly in the absence of income averaging and income splitting.
Make sure you consult with your accountant when you are starting your pre retirement planning.
The original article by Evelyn Jacks can be found here http://www.evelynjacks.com/?p=1368