Enjoy retirement Retirement tips

Everything you need to think about to plan for retirement in Canada

Retirement is a significant milestone and can feel like a huge transition after decades of going to work every day. All the steps involved with preparing for retirement might seem a bit daunting, even if you feel the time is right!

We’ve put together this list of what you need to know to prepare for retirement in Canada to help. It covers:

  • Getting ready
  • How to make it official
  • Your pension, finances and insurance
  • Enjoying the awesome years of retirement
  • Other items to take care of

Our RTOERO members have retired from the education sector in Canada. If you’ve worked in the education community in Canada, you may be eligible to join us, and if you haven’t, most of the tips below will still apply to you!

Getting ready

Set a date

The date you choose for your retirement may depend on several factors. Some of them are covered below, including your pension amount.

Many teachers and others in the education sector choose to retire at the end of June, the end of August or the end of December. Your date isn’t set in stone until you start to submit your paperwork, so if you pick a date but then determine through the early planning stages that earlier or later would work better for you, shift it!

Attend a retirement planning workshop

We host retirement planning workshops throughout the year. Our workshops cover much of the information we’ve shared in this post in more detail. It’s also a chance to learn more about our health insurance for education sector retirees.

Join RTOERO

Join RTOERO now for seamless post-retirement benefits and member benefits. Your membership is free until you retire.

Connect with your RTOERO district

Find out which RTOERO district you’re part of and see if there’s an event you can join.

How to make it official

Contact your HR department

Be in touch with your HR department to make sure you complete all the forms your organization requires.

Write your letter of retirement

One of the items you’ll likely have to do for your employer is submit a letter with your retirement date. While the message has a formal purpose, many people choose to also include some personal reflections in their letter.

Let your colleagues and contacts know you’re retiring

You’ve no doubt built up quite the network of contacts through work. Before leaving, make sure to let them know that you’re retiring and provide them with contact information where they can reach you after retirement. And be prepared to announce your retirement in person to any committees or other groups you’re part of.

Write your speech

If there’s a celebration planned in your honour, it’s likely your friends, family, and colleagues will expect you to say a few words. Here are five tips for giving an amazing retirement speech.

Update your subscriptions

If you subscribed to newsletters or websites using your work email, make sure to update your subscriptions and login information with your personal email address. If you’re already a RTOERO member, make sure we have your personal email address on file.

Pension, finances and insurance

Identify your income sources and expenses

Your income sources in retirement can include Old Age Security (OAS), Canada Pension Plan (CPP), your work pension, savings and investments (TFSA, RRSP, RRIF), and earnings from property, investments or part-time work.

Your expenses include taxes, housing costs, food, medical costs and insurance. Other expenses may consist of debt, travel, hobbies, caring for dependents, and post-secondary education for children/grandchildren.

Calculate different retirement scenarios

Your pension from work may be the most considerable portion of your retirement income. There’s a good chance your pension provider has online tools to help you calculate your pension amount and how it will vary depending on when you retire.

Try different scenarios to see how much it goes up or down. Here are the pension calculators for OTPP and OMERS (two large Ontario pensions for education sector workers and retirees).

Discuss your unique pension situation

Contact your pension provider to discuss your situation.

  • You can ask about what happens if you separate from your spouse or marry while on pension.
  • Find out about survivor benefits.
  • Ask when would be the best time for you to apply – June 30, August 31, mid-year.
  • Ask about how your pension will be affected if you work in education while in retirement.
  • And get the information on how to apply.

Update your pension information

While investigating your pension, make sure to register for online tools and name your survivor, if you haven’t already.

Decide when to start receiving your CPP or QPP

Depending on your retirement age, you don’t need to start your receiving Canadian Pension Plan (CPP) right away. When to take your CPP is an individual decision based on your circumstances. Canadians can take CPP:

  • As early as age 60, with a monthly reduction of 0.6%
  • At age 65, with an unreduced amount
  • As late as age 70, with a monthly bonus of 0.7%

Most RTOERO members’ pension plans provide a bridge benefit to supplement retirement income until age 65. At age 65 (when you’re eligible for your unreduced CPP pension), the bridge benefit ends, and your pension is adjusted. If you take CPP earlier than 65, your pension bridge benefit is unaffected.

You must apply for CPP; it’s not automatic. Here’s information from the Government of Canada on CPP, how much you’ll be eligible for and how to apply.  Here is information about the Quebec Pension Plan (QPP).

 

Make a budget

Can I afford to retire? Making a budget can help you find the answer. A general guideline is that you need about 70 percent of your pre-retirement income, but this doesn’t work for everyone.

To create a budget, list the income streams that will become available throughout your retirement. You can use the retirement income calculator from the Canadian government. Then, list your expenses. Make sure to include needs and wants. It might seem like your income in retirement will be quite a bit less than during your working years, but do the calculations using your net income (your take-home income). You’ll have fewer deductions in retirement.

Seek financial advice

If you’re not already working with a financial advisor, retirement is an excellent time to get advice. An advisor can help you evaluate when the best time is to start your CPP and when to draw on RRSPs vs. your TFSA. They will also help with goal setting and creating a plan so you can maintain the type of lifestyle you want.

Decide about health insurance for retirees

Choosing your retirement insurance plan is one of the most important decisions you’ll make as you prepare for retirement. Retirement health insurance includes medical insurance. In fact, our group extended medical insurance is the most popular benefit among our members.

When you retire from the education sector in Canada, you’ll have different options for your insurance, including:

  • Group insurance coverage through RTOERO
  • Accessing your spouse’s employer group plan
  • Individual insurance plans
  • Taking no insurance and relying on savings and provincial health coverage

Here’s some information about what to compare when looking at insurance options for retirement (plus a handy checklist).

Apply for insurance

If you decide to purchase insurance for retirement, make sure to apply within 60 days of your previous group insurance ending (that’s usually 60 days after your retirement date). As long as you apply within the 60 days, you will receive automatic approval for your hospital and health insurance. Find out if you’re eligible for our comprehensive group insurance for education sector retirees.

Review your life insurance

Consider whether you have enough life insurance to meet your family’s needs should something happen to you. RTOERO members have access to preferred universal and term life insurance rates through Johnson Insurance, our insurance partner since 1985.

 

Create an emergency fund

Unexpected expenses can happen. It’s a good idea to have three to six months of expenses available. If you don’t already have an emergency fund, start setting aside more savings before you retire so you can create one.

Contact your car insurance provider

You may be eligible for a reduction in your auto insurance costs since you won’t be commuting to work anymore. When you contact your insurance provider, ask them when your insurance is up for renewal. If you’re an RTOERO member, you’re eligible for our preferred home and car insurance, so it’s worth comparing!

Think of ways to save money

Finding ways to save on necessary expenses is a great way to extend the reach of your retirement income. Here are some tips for saving on your insurance and other ideas for saving in retirement.

Pay down debt

Paying down debt now can help reduce expenses in retirement. If you have a mortgage remaining, consider accelerating payments. If you know you’ll need to replace your car, consider increasing your savings to use towards payments, so you don’t take on new debt after retirement. Advance thinking can pay off!

Apply for CPP or QPP and OAS

If you’ve decided to start CPP, make sure to apply for it. If you’re 65, you can also apply to start Old Age Security (OAS). OAS is a government-provided pension, intended to supplement income after age 65. There’s an option to defer OAS if you wish. As your retirement income increases, the government will begin to claw back OAS (called recovery tax). Here is information about the Quebec Pension Plan (QPP).

 

Enjoying the awesome years of retirement

Think about activities you’d like to try

When we ask our members for retirement advice, we usually hear suggestions to try a bunch of different activities to find things you enjoy. We also hear that it’s an excellent time to get back to an activity you used to enjoy but didn’t have time to do during the working years.

Having some idea of what you might want to do before you retire, and even getting started with activities, can help with the transition.

Make a social plan

We talk a lot about financial planning when it comes to retirement, but experiencing joy and meaning matter just as much. Retirement can be some of the best years of your life. Download our social planning ebook designed to help you think through how you’d like to enjoy your retirement.

Understand social isolation risks

Social isolation is one of the issues our foundation is tackling, so it’s top of mind for us! The fact is, major life transitions – including retirement – can be a risk factor for social isolation. About 24 percent of Canadians over 65 report feeling isolated from others and wish they could participate in more social activities. You can prevent loneliness and isolation. Here are some tips:

  • Find a cause to support. Having a cause provides purpose and is a great way to meet people and build and maintain skills.
  • Keep yourself active. Staying physically active helps you stay more capable and reminds you that you are capable.
  • Make a plan. Something as simple as a weekly walk with a friend is a great start.
  • Tell trusted friends about what’s happening for you health-wise so they can look out for you in social situations. That way, you’re less likely to avoid going out.
  • Be willing to adapt and remind yourself you can. If you can’t do an activity the same way, learn a new way or try something else.

Other items to take care of

Investigate tax credits for retirees

One of the services we offer our members each year is our Tax Tips publication, which outlines tax points to consider for the current year, plus planning ideas for the future.

Our publication covers Pension Income Tax Credit, Age Amount Tax Credit, Disability Supports Deduction, Refundable Medical Expense Supplement, Canada Caregiver Credit, Home Accessibility Tax Credit and much more.

Income tax rules frequently change, mainly as a result of new government budgets. It’s a good idea to continually monitor your tax situation to ensure you’re taking advantage of the available credits and deductions.

In addition to tax credits, you can also make adjustments to the amount of tax taken from your income sources to prevent owing a larger amount at tax time. Each income source remits income tax independently, which means your marginal tax rate, when all sources of income are combined, could be much higher.

You can request that income tax be deducted from CPP and OAS through your Service Canada account. You can also ask your pension plan to increase the amount deducted.

Determine your power of attorney and update your will

Retirement is a natural point to revisit your will and to make sure you’ve identified a power of attorney for both personal care and property. Keep these tips in mind when selecting your power of attorney:

  • Choose someone trustworthy and who will agree to follow your requests
  • Choose someone who is likely to outlive you and who is accessible
  • Choose a backup if your first choice is not available
  • You may appoint more than one, but too many may become complicated

It’s a good idea to review your estate plan after major life events, like marriage or divorce, an addition to the family or the death of a beneficiary, and after a significant purchase or loss.

Plan for the unexpected

Sometimes we face issues with our health or mobility, or the death of a spouse, that may cause us to experience suffering. Perhaps we can’t continue activities in the same way or live in the way we planned to. Thinking through how to deal with challenges before they happen can provide the peace of mind that there are options available. It might help to take some time to consider how you’d complete these two statements:

If I were no longer able to do a specific activity, I will consider…

I will consider the following options if I start to feel my current living situation isn’t the best solution for my well-being…

Create a list of important documents

A personal inventory of essential documents will be a useful reference for yourself, and it will help your loved ones if there’s ever a time when they need to access the information. When creating your inventory, remember to keep it simple! You can use a spreadsheet and add a password if you’d like. Here’s what you might include:

  • List of insurance policies and contact information
  • List of investment, retirement and bank accounts, with all contact information
  • List of debt obligations, due dates, and contact information
  • Location of relevant documents (your family’s passports, insurance policies, power of attorney, living wills)
  • List of doctors and contact information
  • List of medications and contact information
  • List of all pharmacies that you use
  • Location of safety deposit box keys
  • Location of your original Social Insurance Number card

Purge your closet

You might find your wardrobe needs change when you’re not going to work every day. If you have professional clothing, it could be beneficial to someone else. Look for somewhere to donate clothing you don’t need anymore. Dress for Success has many locations and empowers women to achieve economic independence by providing a network of support, professional attire and the development tools to help women thrive in work and in life. Dress Your Best is a Toronto-based organization that provides clothing for men. There may be options in your local community as well.

Check the expiry date on your passport and provincial health plan card

If travelling is on your to-do list, make sure to keep your documents current!

Did we miss anything?

We’ll continue to update this post. If there’s something we’ve missed, send us a message to let us know!