Managing Money in Your Golden Years
MANAGING MONEY IN YOUR GOLDEN YEARS
Retirement brings a unique set of financial challenges. The key to succeeding money wise is to plan ahead and make changes that suit your new life situation. Here are some key tips to help you transition from regular income to living on savings and pension income.
MONEY MANAGEMENT TIPS FOR SENIORS
Build a retirement budget
To avoid overspending, it’s critical to align your expenses with your now fixed income. Consider how retirement changes (e.g., less commuting and more hobbies) affect your budget. Seek savings and cut programs or expenses you will no longer use as you age. Allocate funds for future health care costs and consider the impact of inflation.
Consider when to start your public pension
There are three possible government pension benefits to consider:
· CPP (Canada Pension Plan) w,hich can start as early as 60 or as late as 70. The earlier you begin to collect, the lower your monthly benefit.
· OAS (Old Age Security) begins as early as 65. The monthly benefit amount increases for each month you delay starting until you reach age 70.
· 4GIF (Guaranteed Income Supplement) is available for low-income earners. There is no benefit to waiting to collect OAS past 65 if you expect to collect the GIS.
Here are some Government of Canada resources to help you decide when to apply:
Deciding when to start your public pension
Guaranteed Income Supplement information
You still need savings
Unexpected expenses can occur at any age, so it’s important to contine to have an emergency fund. You can continue to contribute to a TFSA (Tax-Free Savings Account) throughout your life. Withdrawals are tax-free and do not affect OAS eligibility. RRSP savings must be converted to an RRIF before the age of 71.
Review your insurance needs
If you transition away from company benefits, consider what private health care insurance you may need beyond what OHIP (or other provincial plan) covers. Consider if you still need life insurance (for income support or to cover funeral costs). Retirees may qualify for policy discounts. Contact different insurers and compare premiums and coverage. Inform your insurer if you will be driving less to see if there are potential savings on your car insurance.
Embrace being a senior
Take advantage of senior discount programs, seniors’ events and free loyalty programs to save money. Join a community group or volunteer to meet new friends and try new experiences for free.
Beware of scams
Scammers are becoming increasingly hard to spot and love to target seniors. Be skeptical of anyone asking for money or financial and personal information. A good rule of thumb is never to directly answer a text, email or phone request. Instead, contact your bank, CRA or service provider mentioned in the message directly.
Here is a list of common scams that older adults need to watch out for.
MONTHLY MONEY TIP
Resist the temptation to use credit cards to make ends meet. Interest costs will further erode how far your fixed income will stretch.
Also avoid payday lenders. While they are happy to loan against your retirement income, repaying the loan out of your next pension payment will leave you short again.
CONTEST CORNER
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