BMO Retirement Tips of the Day: Consider All Maturity Options & Avoid Making Too Many Big Changes in Retirement
TORONTO, ONTARIO--(Marketwire - Feb. 13, 2012) - As the February 29th deadline approaches to make a contribution to a Registered Retirement Savings Plan (RRSP) and as part of its ongoing commitment to improving financial literacy, BMO Financial Group will be providing daily retirement tips during the month of February from BMO Retirement Institute Head Tina Di Vito's new book 52 Ways To Wreck Your Retirement…And How To Rescue It.
Tip Number 25:
Consider all your options before you decide how to turn your retirement savings into retirement income
Canadian income tax rules require that you close your RRSP by the end of the year you turn 71. Withdrawals from an RRSP are fully taxable so it is important that you understand and choose the right retirement income options in order for your retirement savings to last.
Consider the following options:
- For flexibility and full control of your funds, use a Registered Retirement Income Fund (RRIF).
- If your goal is to generate guaranteed lifetime retirement payments, convert some of your savings into guaranteed lifetime income products, such as a life annuity.
- If you are under 71 and you end up not needing the early additional income, you can roll your RRIF back into your RRSP to avoid withdrawals that an RRIF require you to make.
- If you have a younger spouse, consider using his/her age to calculate your minimum RRIF payment to reduce your required withdrawal amount.
Tip Number 26:
Avoid making too many big lifestyle changes when you retire
When they enter retirement, people often feel they need to make big lifestyle changes and rush to do all the things they have ever imagined doing because they feel they are supposed to. Often, however, they end up feeling less satisfied than they were prior to retiring. Instead of trying to rush, slow down and enjoy this new phase of your life. Write down a list of activities and things you want to do during your retirement and set a realistic schedule for each. If you have always wanted to live full-time at your cottage or move to Hawaii, try it out on a temporary basis - stay at your cottage during the summer or go on a vacation to Hawaii first.
For more information on retirement: www.bmo.com/retirement.
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