Retirement planning essentials: Checklist to get you ready
Even though you’re still busy working, the years and months before retirement are a key time to plan and prepare. And there’s a surprising amount on your to-do list when you’re approaching retirement. The following can help get all your tasks taken care of – whether you’re retiring in a few years or months.
What to do 10 years before retirement
When you’re about a decade out from retirement, there’s 4 things you should focus on:
1. Estimate your living expenses
- Track how much you're currently spending. You can use this information to estimate how much income you'll need in retirement.
- Develop a realistic budget, and don't forget to account for inflation. To help, use our free budget calculator.
2. Assess your retirement income sources
- Estimate your Canada Pension Plan (CPP) and Old Age Security (OAS) benefits.
- Review your workplace pension plan or any other retirement savings accounts you have.
- Determine if you have any other sources of income, such as rental properties or investments.
3. Review and optimize your investment portfolio
- Ensure your investment mix is aligned with your risk tolerance and retirement timeline. Consider rebalancing your portfolio to maintain your desired asset allocation.
- Explore tax-efficient investment strategies, such as maximizing contributions to Tax-Free Savings Accounts (TFSAs) and Registered Retirement Savings Plans (RRSPs).
- If your employer offers a group RRSP or retirement plan, make sure you contribute enough to get the maximum employer matching. This is a great way to boost your retirement savings.
4. Prepare for healthcare and long-term care needs
- Understand the coverage provided by the Canadian public healthcare system and any additional private insurance you may need.
- Investigate options for long-term care, such as home care, assisted living, or nursing homes, and the associated costs.
- Consider purchasing long-term care insurance to help cover these expenses.
What to do 3-5 years before retirement
When you’re about 3-5 years away from your retirement date, there’s 4 things you need to do:
1. Do a financial check-up
- Record or update the record of your spending habits and consider how they’ll change in retirement.
- Take stock of your sources of retirement income. Remember to include all sources of income (i.e. government benefits, employer-sponsored plans, personal savings, etc.).
- It’s also a good idea to complete a retirement planning tool, like our Retirement Savings Calculator.
2. Focus on eliminating or reducing your debt
- Tackle the debt with the highest interest rate first (i.e. credit card balances).
- Pay a lump sum or increase your monthly payments.
- Find more ways to reduce your debt and improve your finances.
3. Review your estate plan or put one in place
- Get professional advice. Even if your estate isn’t complicated, there can be pitfalls in the planning process. Be sure to discuss your estate plans with a lawyer or advisor.
- Designate beneficiaries for your plans and insurance policies.
- Prepare a will. Your will may include directions on your principal residence, leaving assets for your loved ones or paying taxes.
- Complete a power of attorney (medical and/or financial), living will or directive. Name someone to handle your affairs if you’re unable to, while you’re alive. And specify your final wishes to save those close to you from making these decisions during a difficult time.
- Review your insurance and consider other types of coverage.
- Life insurance may seem less important close to retirement. However, many of the assets you accumulated in life may become taxable in death. So, don’t cancel those policies until you complete your estate plan.
- Critical illness and long-term care insurance can help cover the costs of serious illness and aging. These factors can have the biggest impact on a retirement fund.
Plan how you’ll spend your time
Think about and write down how you’ll spend your time in retirement. To ensure you have a balanced plan, think about activities that support these keys to wellness:
- Taking care of your health. Regular physical activity, healthy eating habits, strength and vitality, self-care and seeking medical attention when needed. And actively managing any pre-existing conditions you may have. For example:
- Join a walking club
- Get regular massages
- Garden and grow your own foods
- Checkups with your doctor
- Try new recipes
- Activities and interests. Creative and stimulating mental activities and expanding your knowledge and skills. For example:
- Read
- Travel to new places
- Go back to school
- Community and social life. Staying actively engaged with the world. For example:
- Join a book club
- Visit the library
- Travel
- Coffee or lunch dates
What to do 6-12 months before retirement
When you’re a year or less away from your retirement date, there’s 4 things you need to do:
1. Create a detailed income plan
- List where your retirement income will come from, how much you’ll receive from each savings source and when you’ll start taking income from each source.
- Think about when you’ll need to start using your savings as income. Ask if it can stay in your workplace plan until you need it, or if you need to:
- Transfer it to continue saving.
- Convert it to a Life Income Fund (LIF), Registered Retirement Income Fund (RRIF), annuity, or other similar product that may apply.
- Revise your plan, if necessary. Talk to a Sun Life advisor or Sun Life retirement consultant.*
2. Set your official retirement date
Talk to your HR department; depending on your workplace plan, you may have some choice on the date, or it may be less flexible.
3. Start the paperwork for government benefits and income products
Think about when you want to start receiving income from your available sources. Some products and government benefits take up to 6 months to start receiving payments. If you’ll need income as of your last day of work, you’ll want to start this process in advance. For information visit servicecanada.gc.ca or rrq.gouv.gc.ca.
| Retirement product |
Estimated time it takes to start receiving income (business days) |
|---|---|
| Government benefits |
120 days |
| Defined Benefit Pension Plan |
60 days |
| Defined Contribution Pension Plan | 30 days |
| RRSP and TFSA |
3-5 days |
4. Think about health benefits during retirement
Ask your employer or benefits provider if you can extend your workplace benefits into retirement benefits.
It’s also a good idea to talk to an advisor about other kinds of insurance you may need (i.e. critical illness insurance or long-term care insurance).
What can you do if you’re not on track to retire?
Here are some things you can do to get your retirement plan back on track:
- Adjust your retirement lifestyle. Think about the little and big things you can do to adjust your lifestyle.
- Retire later. Try the Retirement Savings Calculator again with a later retirement date to see the difference.
- Ease into retirement by working part-time. This can help with your income worries and adjusting to a new lifestyle too.
- Consider collecting government benefits earlier. Canada Pension Plan is available as early as age 60, but at a reduced amount.
Before making any significant changes, it’s wise to get professional advice and understand the consequences and costs. Talk to a Sun Life retirement consultant at 1-888-999-3978 or find an advisor.
What do you need to do during retirement?
Besides enjoy your well-earned retirement, there’s a few things you need to do:
- Manage your retirement plan.
- Monitor your withdrawal rate to ensure your income is sustainable for your retirement.
- Name a Trusted Contact Person.
Even though you’ve retired, you still need to monitor your accounts as economies, lifestyles and costs change. To do this, you need to decide whether:
- You want to be responsible for making decisions about your retirement savings, or
- You’d rather transfer that responsibility to your advisor.
Who can help with your retirement plan?
Whether you’re years or months away from retirement, now is a good time to:
- Meet your advisor to check in, or
- Speak with a Sun Life retirement consultant* at 1-888-999-3978.
Handling these tasks now can help you enjoy the worry-free retirement you deserve.
* Registered as financial security advisors in the province of Quebec.
This article is meant to provide general information only. Sun Life Assurance Company of Canada does not provide legal, accounting, taxation, or other professional advice. Please seek advice from a qualified professional, including a thorough examination of your specific legal, accounting and tax situation.
