In the news: 5 retirement mistakes you can’t undo later

This is a new feature on my blog. Each month I’ll share one story I think is worth your time, along with what I’d take from it. I may not agree with all the points from the article, but I’ll focus on the aspects I think are worth thinking about.

This month’s pick comes from Money.ca: “5 retirement mistakes Canadians make in the planning stages they can’t undo later — and how to avoid them.” It draws on retirement expert Frederick Vettese’s view that the first five years of retirement largely decide how the rest of it goes.

Read the 5 mistakes…and my take.

Two men sitting in white adirondack chairs lookin at Lake Erie at sunset

The five mistakes, in a nutshell

The five mistakes, in a nutshell (with my comments in italics):

  1. Claiming CPP and OAS at the wrong time. You get one shot at this decision, and the difference between starting early and waiting is significant. (I often prefer earlier…but not always.)
  2. Skipping tax planning in the early years. The years between retiring and converting your RRSP to a RRIF can be a low-tax window to draw down registered savings. (Tax planning as you prepare for retirement can be just important as when you were actively running a business, for example.)
  3. Wasting your healthiest years. Do the physically demanding bucket-list trips first. (And don’t forget to invite your favourite accountant.)
  4. Not planning for medical and long-term care costs. Provincial programs don’t cover everything, and provincial wait lists can be long. (This can eat considerable retirement funds while being critical to how you live your life.)
  5. Ignoring sequence-of-returns risk. A market drop early in retirement does more damage when you’re selling investments to fund your income. (The math here can be scary.)

My take on the 5 retirement mistakes

Mistake #2 is where I see a lot of tax money left on the table, especially for incorporated professionals and investors who have more than one pot to draw from. The author provides one example, but many more exist.

While I can add more points, given our upcoming webinar, I’d also add a sixth: retiring without a plan for incapacity. A retirement plan may assume you’ll be there to run it. That’s exactly what we’ll tackle at the Peace of Mind Playbook Office Hours with George on November 12.

Read the full article: Money.ca

Resources

For additional resources related to retirement planning, see:

More questions?

Still have questions? I want to help you Do wonderful things®, so please contact me today.

Let's talk

Remember – circumstances are unique! This information is summary in nature. Seek out advice from your tax advisor about your specific situation.