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Preparing for your release

older couple in front of calculator
Readying for life outside the military is both challenging and exciting. The earlier you create a plan for your retirement, regardless of your age at the time of release, the smoother you can make the transition to the next phase of your life.  

When should I start planning my retirement in detail? 

Five years prior to release is often pegged as an ideal time to start examining your post-military life in detail. Start by determining the age of release, so you can assess your health, finances and retirement goals. 

Tip: Financial planning for retirement is a long-term exercise. Start thinking about retirement early in your career to ensure you have the income to support your lifestyle. 

Consider your post-military lifestyle 

Detailed financial planning works best when you take the time to understand your values and goals. Consider your post-military lifestyle. Do you intend to launch a second career or start a consulting business? Maybe you can’t wait to play more hockey, spend time at the cottage or volunteer for a community group.  

Think about where you want to live and what’s important to you. If you see frequent travel in your future, you may consider downsizing. On the other hand, a larger home could be necessary if you have extended family living with you.  

Tip: Write down your vision for life after the military and examine it frequently so you can make adjustments as you get ideas.  

Conduct an income assessment 

Once you know how you want to live, determine how you’ll pay for it. Book an appointment with a financial planner to identify all sources of income. Your post-retirement income may include a combination of any of public pensions and private investments, depending on where you live and how you’ve invested your money. A financial planner will also help you plan ahead to address the tax on multiple sources of income. 

Public income and pensions: Canadian Armed Forces defined benefit pension, the Canada Pension Plan (CPP), the Quebec Pension Plan (RRQ), Old-age security (OAS), once you’re over 65. 

Private income: Registered retirement savings plan (RRSP), Tax-free savings account (TFSA), non-registered investments, life insurance annuities, inheritance, other. 

Tip: A financial advisor can help you apply for OAS and RRQ at the right time, shift your investment mix depending on your risk profile and adapt your tax strategy. 

Convert investments to income 

A financial planner can help you understand how to withdrawal money as income from your private investments, such as RRSPs and TFSAs in a way that’s tax smart.  

In some cases, for example, it could be advantageous to convert your spouse’s RRSP to a Registered retirement income fund (RRIF). If your spouse is also retiring, but without a work pension, a RRIF offers a tax benefit. The maximum age to convert an RRSP to a RRIF is 71-years-old. 

If you’re looking to upgrade your education or training, start a second career or launch a business following retirement, a financial planner can walk you through the best way to access your money to fund your new career. 

Tip: If you’re receiving a public pension, withdrawing funds from your RRSP as income, or collecting dividends from a business, a  RRIF may not be the right account for you. 

Update insurance policies 

Your insurance needs may change once you’re retired. A change in lifestyle is a good opportunity to reassess your life insurance needs to make sure you aren’t paying for coverage you don’t need. Alternatively, you may wish to increase your coverage, depending on your income, assets and beneficiaries. 

You can get help from a SISIP advisor with complex paperwork. You may no longer require critical illness coverage, for example. Paying premium that allows for dangerous occupations may no longer be required. Perhaps you need to transition from your General Officers Insurance Plan to the Military Post Retirement Life Insurance plan, which is a taxable benefit. If you’re planning to travel outside of the country in retirement, you’ll need good travel and extended health insurance.  

Tip: An advisor can help you determine if you have any life insurance annuities as part of your future income, and how to invest lump sum amounts. 

Create a budget 

Once you’ve identified how you want to live and the income you have to support your lifestyle, creating a budget can empower you to meet your goals. People are sometimes reluctant to create a budget, feeling it may restrict their spending. In fact, the opposite is true. By aligning your spending with your values, you ensure you can always pay for the things that are most important to you.  

Tip: Try SISIP’s budget worksheet to identify fixed and fluctuating costs, plus periodic and discretionary spending. 

Experiment with your retirement lifestyle  

If you’ve always dreamed of a condo in Florida, but you’ve never been to Florida, check it out before you retire. Likewise, join some community organizations and sports clubs prior to your release, so you can make connections in the broader community and ease into your new routine.  

Tip: It’s easier to transition to retirement if you’ve already made connections outside the military community. 

Stay connected  

Following a career in the CAF, many members feel a sense of loss at their departure from this lifelong club. As a veteran, however, you and your family always have a connection to the military, including social clubs and events, counselling, financial help and supports. The end of your military career doesn’t mean the end of your membership in this unique community. 

Tip: You’re always part of the CAF community 

Contact your SISIP advisor today to review your financial plan and set you on the path to financial health. 

The comments contained herein are a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. This article was written, designed and produced by SISIP Financial, for the benefit of SISIP Financial, Investment Funds Advisor, a registered trade name with Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia Financial Services Inc. The information contained in this article comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any securities. Mutual Funds are offered through Investia Financial Services Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments.  Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated.