Retiring from the workforce as you know it requires a great deal of planning and a disciplined approach to saving, decades before you retire completely.

Just as your needs change over time, wealth planning now changes. It may include shifting into lower-risk portfolios while ensuring the best possible return on your investments.

Articulating your goals clearly will help define where your financial advisor invests or places your funds to work for you.

A good financial planner will ask relevant questions and provide insight into which information sources are best to further your knowledge and understanding.

This September, Marci Perreault, a certified financial planner and partner at KenMar Financial Services, offers some areas to consider as you manage your retirement savings for many years to come.

When You Retire, Financial Literacy Expands 

By: Marci Perreault

Wealth planning doesn’t retire when you do – it just changes. Now, financial life is largely about making the most of the wealth you’ve accumulated. You’ll be learning about new rules, products, and strategies that involve a broad range of financial considerations.

Fortunately, your expanding financial literacy doesn’t have to happen all at once. You can acquire new knowledge gradually as needs arise.

From Accumulation to Decumulation

When you have retirement savings in your Registered Retirement Savings Plan (RRSP) or Registered Retirement Income Fund (RRIF), Tax-Free Savings Account (TFSA), and non-registered account, how do you know which source to tap first for income? You’ll learn that there’s no formula to follow. It depends on each retiree’s particular tax situation, government benefits strategy, and estate planning goals. We’ll work with you to develop a plan that suits your circumstances. This may be a balancing act in which you draw varying amounts from multiple sources.

Along the way, you’ll also learn about splitting pension income, making RRIF withdrawals strategically, and ensuring you don’t outlive your savings.

Planning Your Estate

Although estate planning typically begins in your working years, new factors often arise during retirement.

  • Controlling an Inheritance: If you have reason to control how an heir receives their inheritance, you’ll want to know about trusts. Situations include being in a second marriage and wanting to leave an inheritance to children from your first marriage, having minor beneficiaries, and preferring that an heir receives funds over time instead of in a lump sum.

  • Covering Tax: You’ll learn about ways to minimize the tax on your estate’s assets, such as gifting certain assets now to limit their appreciation or transferring assets to your spouse upon your passing. Also, you’ll develop a plan to cover the tax liability that is ultimately payable by your estate.

  • Using Life Insurance: One way to offset the tax on estate assets is through a permanent life insurance policy. Life insurance can also help equalize inheritances—for example, when one child takes over the family business and the other child receives insurance proceeds. With life insurance, the financial need is taken care of as soon as you pay the first premium, and proceeds are received tax-free, but the cost of the premiums must be weighed against other funding solutions.

Repurposing Your TFSA

In retirement, your TFSA could become a tax-free environment for any funds from your minimum required RRIF withdrawals that you don’t require as retirement income. Also, you can take advantage of the tax-free nature of TFSA withdrawals in several ways, such as minimizing any clawback of Old Age Security (OAS) benefits or preventing your income level from being pushed into the next tax bracket. You’ll also find out about different ways TFSA assets can be used in estate planning, either to help manage taxes on your estate’s assets or to leave as an inheritance.

Investment Changes

When you’ve been investing for decades, there’s not a lot that’s left to learn. However, you may be introduced to several products and strategies designed for the retirement years. For example, you can choose new non-registered investment funds that provide tax-efficient monthly income. To safeguard against withdrawing funds when the market is down, some retirees draw their income from a cash reserve that they replenish periodically.

We’re Here to Help You

Wealth planning in this new chapter of your life involves many decisions you haven’t faced before. However, with our help, you’ll find that your financial life during retirement goes smoothly.

Stay informed. We’ll educate you on each new topic so you feel comfortable, not intimidated.

Explore options. When a wealth planning matter arises, we’ll outline the available options. For example, say that a retiree wants to give financial support to grandchildren of varying ages. The first choice is whether to give funds now, leave an inheritance, or both. If it’s now, will the funds be for education costs, a down payment on a home, or any future use? If it’s an inheritance, will grandchildren be named in the will or designated as beneficiaries of a life insurance policy or a registered plan?

Be well-advised. If a decision is simply based on personal preference, we’ll let you know. When a solution depends on your unique financial situation and goals, you can trust us to recommend the product or strategy that best meets your needs.


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