5 Tips You MUST KNOW For Your First Year Of Retirement

hi my name is adam welcome to the channel thanks for joining us today today we're going to go through five tips for your first year retirement we watch hundreds of clients walk into retirement and make mistake after mistake after mistake making that switch from you know working collecting a paycheck into retirement is a big transition and we've talked about that a lot on this channel so i just want to give you kind of five points or five tips as you walk into retirement just to help that you know help be a smoother transition for yourself now before i jump into the content you might notice i'm talking a little funny today my uh my face is a little bit swollen i'm i think a bit of a black guy this morning so i've had some dental work done i'm getting more dental work done i'm not sure what's going on but it sounds like about three three more root canals coming so if i'm talking a little funny today if i look a little funny i apologize but i wanted to get content out you guys i know i have a lot of loyal followers i do appreciate it and i want to make sure i don't let you guys down so i want to get a video today so but if i am talking a little bit funny i apologize up front so tip number one heading into retirement is be prepared to spend your money and this is the biggest psychological shift so when you hit retirement it's really only about 10 financial and 90 psychological is a big mental shift to walk into retirement the biggest one that we see day in and day out is you're in saving modes okay if you're kind of ramping up to retirement you're in the financial mode still you're save save save save try to build this big nest egg for retirement so you have more to spend when you hit retirement it's the opposite now you're not putting money in you actually draw money out and for a lot of you if you've built up big accounts you might be pulling out a fair amount of money okay so you need to be prepared for that again we put plans together and we say look you need to pull 80 000 a year out of your rsp and you know you're sitting there saying well no i've been saving 50 000 i'm not pulling 80 out in one year like that makes no sense well it does when we put plans together everyone's numbers different the point is be prepared to actually start ripping money out of your investments that's what you're living off of that's your paycheck now okay the second tip i have for you as you enter into your first year retirement is make no rash decisions and a lot of you will a lot of you might you know relocate buy sell a house you might you know not take out rrsps you might try and create a zero tax bill you might give away a bunch of money you might you might do something a bit out of the norm okay for the first 12 months of retirement try to keep your life as normal as possible okay i know you're not working anymore you have 40 hours a week you got to fill with something keep it kind of level-headed mild-mannered make sure you don't make those rash decisions because that could cost you retirement okay again some of these that we've seen is yet to retirement you know you know that you have maybe 50 60 000 a year to spend and then you go buy a brand new vehicle that wasn't in the budget and you're like you know what we just we want to do some travel we wanted a safer vehicle okay i get that but that's a rash decision make sure if you do a large purchase something like that make sure it's part of the plan build a plan before you enter retirement if you're already in retirement and you don't have a plan get a plan in place know how much you can spend where it comes from how long it'll last and how to fund large purchases like that okay if you create a plan it's no longer a rash decision a rash decision is spending money or doing something out of the norm that you have not prepared for and maybe that you don't have the money for before we jump into number three if you aren't already subscribed to the channel please hit the subscribe button join our channel uh there's i think 42 000 or so of you uh that are part of the channel we appreciate every single one of you trust me and if you enjoy these videos make sure to hit the thumbs up it really does help get our videos out to more people and as i struggle to fight through recording this video with a lot of mouth pain i i really appreciate so if you enjoy this video hit the thumbs up helping it out to more people and again we really do appreciate the views the third tip as you enter your first year retirement is to make sure you know when to take your cpp and ois and a lot of you will just kind of default okay so some of the defaults are well i'm 60 and i can take my cpp and i want the money as soon as possible so i'm gonna take it okay that's one that we see quite often another one would be if you have a pension plan with a bridge benefit a lot of you you know once your bridge benefit ends at 65 you by default will start your cpp and then a lot of you just say you know i'm retired i'm i'm starting both right obviously i have to wait till 65 to start your oas but those are kind of the three right and and the decision if i ask any of you that kind of pulled the trigger on that i said like why where's the financial data where it's a financial planning behind it and you don't have an answer for me there is a right time and a wrong time to take your cpp and ois okay it's different for everyone but there is a right and a wrong time taking cpp at the wrong time could cost you you know tens some clients hundreds of thousands of dollars in retirement okay and and typically it's if you took your cpp at 60 you don't you have this much income if you take it at 70 you have this much income you have a lot more income typically if you delay your cpp and strategize the rest your assets a lot of people say no no adam there's no right or wrong time it's all personal preference i disagree one thing that we will typically recommend for our clients across the board is if we run the numbers and it actually makes sense financially to delay your cpp and take it at 70 we will still typically take or recommend to take old age security at 65. now why there's a bigger benefit to delay cpp right it's point seven percent per month versus point six that's benefit number one but it's not actually a financial decision it's a psychological decision when you hit retirement you know you've paid the government so much money in taxes and you paid into your cpp and all that but a lot of you if we say look delayed both till 70 you'll trigger both earlier so you know having that oas started 65 is a check box right it's a psychological check box of i'm collecting a paycheck from the government so that's a tip that we will roll out with most of our clients we don't usually share those kind of tips on this channel but there you go there's a little bit of a nugget you know hit that psychological check box because again retirement is massively psychological taking your own ass at 65 getting that government paycheck but delaying that cpp you're hitting the psychological check box and the financial one as well so there's a good tip for you if you're not sure how to do it that may work well for you the fourth tip heading into retirement in the first year is have a tax strategy and this is probably you know struggle number two that we see um outside of the kind of transition having multiple income sources okay so right now if you're still working you probably have one income source right you go to work every day you come home every two weeks money's deposited into your bank account you know taxes withheld but you have one source of income and taxes withhold on that one source of income so when it comes to tax time you will typically you know have paid roughly the right amount of tax if you work for one employer and you know they take your tax off at tax time you're not going to get a massive refund or you're not going to owe a massive amount unless there was some extra thing in there right you might get a big refund if you had a lot of donations or rsp deposits or something like that but you'll probably have paid the right amount of tax fast forward to retirement you have cpp oas a pension plan an rsp a non-registered account you have all these income sources maybe some rental income okay you have all these different income sources and trust me they're not taking enough tax off okay if you take your cpp and ois sometimes they're withholding none maybe 10 percent um with your rsp again when you convert to a rift the minimum amount on a riff there's no withholding tax so if you're only taking out the minimum you're definitely not paying enough but even if you're taking above and beyond the minimum your only tax on the amount above the minimum okay what happens typically in the first years often two years of retirement when you hit tax time you haven't paid enough tax you know your 10 000 cpp and your 6 000 oas and your rsp and all these income sources come together and you made sixty thousand dollars but you only have six thousand or four thousand of tax withheld paying tax isn't a bad thing in that situation right there's obviously tax strategy minimized tax but paying tax isn't a bad thing you just you haven't paid enough throughout the year but if you have a plan in place a tax plan and you know look these are all my income sources this is how much tax i'm gonna have to pay here's how much withholding i know i'm gonna have a two thousand five thousand whatever it is tax bill if you know that tax bill's coming it's a lot easier to pay right so there's two ways to do this either you ask where you're getting income from whether it's cpp oas rrsp wherever it's coming from ask them to withhold more money so that when tax time comes you have roughly the a better amount withheld and you're not going to owe money maybe you'll get a bit of a refund the other way to do it is just to have a plan and no look i'm not having enough tax withheld but it's sitting in my accounts for longer income tax time if i have to pay 5 000 i have a plan where that money is coming from to pay that tax bill i'm prepared for okay there's no right or wrong answer here but either have if you're the type that doesn't like to owe money at tax time because mentally that just throws you off have more money withheld at source okay so when you pull money from your riff ask your financial advisor or investment person whoever's dealing with that to withhold more money withhold more taxes cpp and oas make sure you're having money withheld there as well if you have a pension plan you can request more money withheld there as well okay have more money withheld at source so that come tax time you don't have a big tax though and the fifth and final tip is don't do any large financial transactions in the first 12 months of retirement now i talked about kind of rash decisions earlier this kind of ties in it's a little bit different okay don't downsize your house in the first 12 months a lot of you when you hit retirement you want to downsize which is a great thing you can put a lot of money back in your pocket and help fund your retirement but the problem is don't do it in the first 12 months there's too much transition and a lot of the times we see you know if you are married you know husband and wife or couples you're retiring around the same time so not only are you going from you know waking up going to work both of you and then coming home and kind of now you're both home and you're doing this a bit more and now you're trying to do a big financial transaction which causes stress there's way too much going on at once again there's a big transition you have 40 hours a week you gotta fill and you're gonna start like going loopy you're gonna start like how do i fill this time what do i do you need to kind of create structure around your personal life first and then make that big financial transition for some of you it may not be changing your principal residence it might be buying a cottage or selling a rental property if you have rental properties it probably means you're going to sell your rental properties in the first you know one to five years try and wait at least 12 months before you sell that first rental property just again to get a bit of flow to your world as retired you know get a handle on your finances on the cash flow that and then you can start liquidating those rental properties so again whether it's a rental property your principal residence cottage any large financial purchase try and wait the 12 months to get some structure behind your retirement plan so there you have it five tips heading into retirement hopefully you can implement one hopefully five of these but take at least one of these as you enter into retirement if you're already early in retirement leave a comment below let us know do any of these kind of line up with what you struggle with did you struggle with them how did you get through it um we always love to hear comments from you guys and especially kind of feedback if again if you're in retirement leave a comment below it helps people that are kind of coming into retirement did i miss one was there a big struggle that you had that i didn't talk about here that you want to share leave that comment below we always appreciate that so thanks for joining us in this video sorry about the language the face all that but hopefully you still got the content out of it that's what's important we'll see in the next video

Channel: Parallel Wealth

Views: 44,710

Keywords: Financial Planning, Retirement Planning, Retirement, Tax Planning, Investing, Real Estate Investing, Savings, RRSP, TFSA, Wealth, Parallel Wealth, 5 tips for retirement, tips for retirement, when to retire, how much to retire, when should I retire, best time to retire, do i have enough to retire

Id: R3Jh5wOu13w

Length: 11min 56sec (716 seconds)

Published: Tue Dec 14 2021