Your Sun Life advisor can help. Don’t have an advisor?
Need to retire early? Here’s what you can do and how an advisor can help.
March 14, 2025
By Anne Levy-Ward and Sun Life Staff
Retiring sooner than you expected? Find out how working with an advisor can help you make a smooth transition to retirement – whether you feel ready or not.
Retirement is a significant life transition many Canadians like you spend years planning for. Yet sometimes retirement comes earlier than expected. Read on to better navigate the challenges of sudden retirement. And, more importantly, make the most of this new chapter in your life.
Why retirement may come early:
Health issues. An injury, sudden illness or a worsened chronic condition may make continuing to work impossible. Or you might have to care for a loved one who is sick.
Job loss. If you’re close to retirement age, a similar job with a comparable salary could be tough to find.
Your partner’s situation. Your partner may be already retired, and eager to begin the next chapter of your lives together.
Whatever your reason, don't panic. You've been preparing for this your whole working life; it’s only the timeline that may have changed.
What can you do when you retire unexpectedly?
Here’s how to make the best of an unexpected retirement:
1. Understand your employer’s offer
This is your very first step – especially if you’ve been laid off. Carefully review what your employer is offering you, including severance, benefits and your company pension. Consider assembling a team of professionals, including:
- a lawyer to review your former employer’s offer before you agree to it,
- a tax accountant to manage any tax issues, and
- your advisor to adapt your pension and savings strategy, making sure it reflects your new reality.
If you no longer have employee health benefits, speak to your advisor about using personal health insurance to protect yourself.
2. Explore government support
If you’re still open to working, you may be eligible for Employment Insurance (EI) benefits while job hunting.
If health issues forced you to retire early, look into Canada Pension Plan (CPP) disability benefits, which pay until age 65, if you qualify.
3. Talk to your advisor
Your advisor can help you calculate your income needs, manage your retirement savings and co-ordinate your retirement income.
Here are some important questions your advisor can help you answer about your retirement income sources:
What will my retirement expenses be?
Everyone’s vision of the ideal retirement is different. And it will take some time to figure out what you want and need in your retirement years.
Embrace that transition. “Instead of accumulating savings, now you’re in a period of de-accumulation and preservation of assets. It can be hard to adapt,” says Scott Evans, an advisor at BlueShore Financial in North Vancouver, British Columbia.
You could spend less than you did while you were employed. “You won’t have to buy lunches and a work-friendly wardrobe, and you won’t have to pay to commute.”
Attaching numbers to the things you want to do in retirement will help you find ways to shift resources to pay for your new needs and goals.
Where will I get income for my retirement?
A retirement portfolio may include:
- a government pension, like the Canada Pension Plan or Quebec Pension Plan
- a workplace pension,
- a registered retirement savings plan (RRSP),
- a registered retirement income fund (RRIF),
- an annuity,
- home equity, and
- non-registered investments.
Work with your advisor to make a financial inventory so you can have enough to pay for the lifestyle you choose. Seeing the total amount of income may also help you get the most from your Old Age Security (OAS) pension.
What about my RRSP?
If you have an RRSP, you could convert it to a RRIF right away. But it may be wiser to wait. You can keep your RRSP open until the end of the year you turn 71. You have until then to decide what to do with it.
How can I handle my retirement package?
Your severance pay may have tax implications. Check with your advisor to see if you can afford to invest any of it. In that case, you can choose investments to maximize your retirement income and keep your expenses low.
How does the stock market affect my retirement?
With retirement only weeks or months away, market volatility* may concern you. An advisor can help you develop a strategy with the level of risk that best suits your situation.
One option is to buy an annuity with part of your retirement savings. Life annuities can give you a guaranteed income for as long as you live. Market ups and downs don’t affect the income from an annuity.
* Market volatility refers to dramatic swings or ups and downs in the stock markets.
Do I need to update legal documents?
Review important documents, including:
- your will,
- the beneficiaries listed on your will, life insurance, RRSP, tax-free savings account (TFSA) and other investments, and
- your medical directives and power of attorney.
An advisor can help you change the beneficiaries listed on your pensions, insurance policies and investments. A lawyer can update your will and power of attorney.
What happens to my workplace benefits?
Some employers offer their retirees extended medical and dental benefits or continued life insurance.
Investigate if you have access to a “roll-over” benefits plan for former and retired employees. These benefits may not be as comprehensive as the plan you had while you were working, but could be less costly than personal health insurance.
“An advisor can help you compare these options with a personal policy,” says Evans.
Making the most out of retiring early
Sudden retirement can be jarring. With proper planning and support, it can still be a positive transition. Your needs and circumstances may change throughout retirement. Remember to regularly review and adjust your plan
Here’s a handy checklist to help you prepare for a financially stable and fulfilling retirement:
Assess your financial situation: Take stock of your assets, debts and potential income sources.
Explore the possibility of a new job. A part-time position could help you stay active, meet people and earn extra income
Create a new budget: Adjust your spending plan to fit your new circumstances.
Review your investment strategy: You may need to shift to a more conservative approach.
Maximize government benefits: Ensure you're receiving all eligible pensions and benefits.
Consider downsizing: Moving to a smaller home or less expensive area can reduce costs.
Stay healthy: Prioritize your physical and mental well-being to reduce health-care costs.
Develop new routines: Find meaningful activities to replace your work schedule..
Keep learning: Consider courses or hobbies to stay engaged and potentially develop new skills.
Maintain social connections: Build a support network to help with the transition.
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.
