Life after the military
As you ready for retirement from the Canadian Armed Forces (CAF), you may consider downsizing. Many people to take advantage of off-peak travel or timeshare opportunities when they retire and don’t want to feel tied down. Others don’t want the responsibilities of owning a large home. Whatever your reasons, here are some considerations.
Get clear on why you’re downsizing
Maybe you desire a smaller space or less upkeep. But “downsizing” is sometimes more about a change in geography than it is about shrinking your living space. You may want a house on a single level that accommodates aging in place. Some retirees move to a cottage or secondary condo they already own in a rural or tourist area. Others want to cross country to be closer to their adult children and grandchildren. Maybe you’re hoping to take advantage of lower real estate prices outside urban centres. Identify the reasons for your move to sharpen your search and your budget.
Set a timeline
Start thinking about retirement living three-to-five years before your release date. This gives you time to examine your financial health, clear debt, top up your savings and look at the costs associated with downsizing.
Establish a budget
Sit down with an advisor to assess your net pension and other sources of retirement income, including investment income. Younger retirees may not be eligible for Canada Pension or Old-age Security for years, and your net pension may be less than your current salary. Countering that, you may have reduced expenses in retirement. For many retirees, how they spend money changes, so it’s worth assessing the big picture of your finances and creating a realistic budget that suits your lifestyle change.
Assess your investments
Following your release, you may continue to invest money into your registered retirement savings plan (RRSP), your spousal RRSP or take advantage of earnings in your tax-free savings account (TFSA). Did you know you can continue to benefit from tax-deferred savings in your RRSP until age 71? Your SISIP advisor can assess any changes to your risk profile in the lead-up to retirement and help you determine the best way to earn income from your investments following your release. Depending on your age and income, talk to your advisor about when to convert your RRSP to a Registered Retirement Income Fund (RRIF).
Survey the real estate market
The price of condominiums and smaller homes has risen rapidly in most parts of the country. Once you know your retirement budget, sit down with a buying agent to see what’s available in your price range. Talk to your advisor about your financial capacity to cover a down payment or cover moving costs.
Check mortgage eligibility
If you expect to use profits from your existing home to purchase a new one, you may not require a mortgage. Before you start your housing search, it’s a good idea to sit down with a mortgage specialist, get your current property appraised and determine your eligibility and need for a mortgage.
Examine your life insurance needs
Habitually, people require a lot of insurance earlier in their military careers when they have dependents and a higher debt load. As your life circumstances change, it’s a good idea to reassess your life insurance needs. Your insurance specialist can talk to you about the differences between term life and permanent life insurance policies, and the amount and type of coverage to suit your needs in retirement.
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 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.
