Retirement Transition - Why Your First Step should Be a Plan

Retirement Income Planning, Calgary

Let me save you a lot of grief and money as you prepare to retire. Avoid making a bunch of financial decisions willy-nilly based on what other well-meaning people tell you. Start with some planning because it will save you thousands of dollars throughout your retirement.

There are several decisions in retirement that cannot be undone and can result in you losing a lot of potential income. You are planning out the next 30 + years of your life and it needs to be done properly.

It is possible to add an additional $65,000 of tax-free income from ages 65-70 if you delay CPP to age 70 and start only with GIS first.

By delaying CPP to age 70 you will also earn 42% more than you will at age 65 and 78% more than you will at age 60.

On the flip side, you can reduce or eliminate a potential OAS clawback by not delaying your RRIF conversion to age 71.

Confused yet?

The thing is - there are so many choices and every choice will have an impact on something else. It's called the law of unintended consequences. Take the RRSP to RRIF conversion at age 71 for example. There are several potential downfalls. First, now you are forced to start taking the minimum annual payment of 5.28% at age 71 and that increases each year.

When you delay drawing down your RRSP you are now regulated to take a minimum amount of money on a higher balance. Secondly, if you are married and your spouse passes away prematurely, you now have two RRIFs to contend with and now you will have a higher minimum income to take and this could start reducing your OAS income and other government benefits. A third downside is the potential tax hit if the last surviving spouse dies and the entire RRIF is now income in one year. That could be a 48% tax bill in Alberta - more in other provinces.

Portfolio design 

How you grew your money is not the same as how you will withdraw your money. Maybe you had a genius strategy and are sitting on a large nest egg. What is the best order to get the most life-long income and pay the least amount of taxes? Should your TFSA and your RRSP/RRIF have the same strategy? 

Insurance. Medical benefits. Going to the dentist. Physio. Prescriptions. Travel insurance.

Estate and Will planning. Who will look after your affairs when you are too old to do them yourself? Who do you want to have what's left? What are the ways to avoid probate and simplify your estate?

Long-term care planning. Who's going to look after you when you get old? It will never happen to you. You will be the first person to grow old and just die in your sleep - painless - easy. Unlikely. Memory loss. Sickness. Bad knees. Downsizing your home. When? Before it's too late, I hope. How will you pay for it? Are you depending on government assistance? Well, I hope you have the time to wait because the list is growing faster than you may realize. Private facilities - be prepared to pay a lot of money.

Leaving your future to chance is not a plan!

What every soon-to-be retiree needs is a comprehensive plan that deals with the issues and questions outlined above. The proper order of taking income can ensure you have a sustainable level of income throughout life that can ensure you don't overspend and become a burden to others or underspend and die the richest person in the graveyard.

The flat fee you will pay us is a fraction of what you will save over your lifetime. 

Check out our fee-only planning service here.

Retirement Income, Investment, & Tax Planners,

Willis J Langford BA, MA, CFP

Nancy R Langford CRS

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If you are nearing retirement, newly retired, or well into that stage of life and need some honest, reliable financial advice and tax planning services, I highly recommend Willis and Nancy Langford at Langford Financial. I have been working with them since the fall of 2020 and am really happy I made the switch.

I needed much better advice than I was getting from my new bank rep as I was actively preparing for retirement. I found Langford Financial online and booked a review meeting. I was happy that I was sent a complete list of all the information that would be needed prior to my initial meeting so I arrived prepared.

From that initial meeting, I decided to have Willis prepare a retirement plan for me. After we reviewed everything he had prepared, I felt much more confident in what was to come financially during retirement and how I could manage it. That's when I decided to transfer my investment portfolio from my bank to Langford Financial so they could manage it with and for me. I felt they really had my best interests at heart.

It was a pleasant surprise that their approach combined both income planning for retirement and tax planning for both the immediate future and well into retirement. This has proven to be very helpful as it has ended up saving me a lot of money (a lot!) by using credits that had been missed by the company I previously used to prepare my taxes.

I really like working with Willis and Nancy. They are very quick to answer any questions I have and can accommodate virtual or in-person meetings based on what is needed. They also produce a regular newsletter that I really enjoy. It has lots of tips in it and some very good in-depth information that helps me make better decisions---or at least ask better questions!

Moving to Langford Financial was a great decision for me. It has lead to better financial planning and decision-making and much greater peace of mind for me at this time of life.
Sharon Stroick
Full Service Client Since 2020

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