Five Money Mistakes YOU MUST Avoid In Retirement

hi my name's adam thanks for joining us today in our fifth video on money mistakes and today we're going to cover off money mistakes of people in retirement and this is a very important one because you know once you get to retirement you can make mistakes along the way but once you get to retirement you have no more paychecks coming in so any small mistake can really amplify itself so today we're going to go through five money mistakes that we see retirees make that come into our office before we jump into it if you're new to the channel thanks for joining us today if you haven't already subscribed make sure to hit the subscribe button we cover off financial retirement tax and estate planning for canadians so we cover a plethora of topics covering anyone from 20 year old up until 100. so we try and create content for every age demographic again this series has covered off everyone from you know 20s 30s 40s 50s and now into retirement so you can kind of find your place in this series and going forward we'll continue to release new videos on information around you know how to save how to pay down debt you know maybe the best credit card out there how to retire when to take your cpp which we did recently as well so a bunch of different topics so make sure to subscribe hit the notification bell and we release a brand new video every tuesday and friday each week and lastly before i jump into it i just want to say thank you to all of you that have been watching our videos the last week week and a half our channel absolutely exploded about a week ago um so thank you to all of you that are watching our videos we really do hope they're helping you you're finding them informative and of course if you have any questions on this video any other videos make sure to put a comment in the comment section below and we will make sure to get back to you within about two or three days so we want your questions below we will help you we're here to help canadians retire better save better pay less taxes and just understand the financial landscape in canada and the retirement landscape in canada much better so thank you for joining us so the very first money mistake that we see retirees make is not enjoying their money early on in retirement so whether you're retiring at 55 or 65 or 70. it doesn't matter when it is when you retire if you're healthy enough you are going to likely spend more money earlier in retirement than later in retirement so when we run retirement projections for our clients and create financial plans often we will create a scenario where it's the same income from 65 to 95 but the reality is is you're going to use a lot more income or need a lot more income earlier in life than later in life so you know one mistake that retirees make is that they don't kind of spend more now and i know you need to make sure you don't run out of money and all that that has to come into the plan but you know all too often we have clients in their 90s that have so much money in their savings and you know we met them maybe in their late 80s and they just didn't spend enough money early and they're gonna die with a ton of money and they wish they had maybe traveled more earlier spent more time with family friends and and put money into that process so if you're entering into retirement or early in retirement make sure to enjoy it not at the cost of your future retirement but make sure that you don't die with millions of dollars in the bank when you expect it to die with nothing so you know plan accordingly figure out how much you could spend now and maybe sacrifice a bit later on uh but you know don't hold off on spending enjoy it now while you're healthy and you're able to travel and all that obviously covert puts a bit of a dent in that but when we're able to start traveling again you know make sure you take those trips and spend that money on those fun things the second money mistake we see uh people make in the retirement and you know this is where we get the majority of our clients is people coming into so most of our clients come to us kind of pre-retirement or early into retirement without a plan and that is probably the number one money mistake it should be number one but number two today is you don't have a clear plan you kind of go into retirement with a blindfold on and you listen to your neighbors and family and friends and make decisions based on what they tell you which sure there may be a qualified person in your family or close circle of friends but probably not so make sure you hire professionals whether you're working ongoing with a financial planner or just hire them to put a plan together with you to give you some clear guidance moving forward but you know the number two money mistake for retirees is just going into retirement blindly with no clear plan so make sure you have a plan uh you know it'll cost you a bit of money upfront or if you're already working with a financial planner if you have investments whether it's at a financial institution whether it be a bank or an independent financial planning firm or office they should be providing new financial planning services so you're likely paying for them make sure you're getting those services and if you're not if you feel like you're paying for something you're not getting give our office a call we're happy to sit down and help you and give you our options that on how we work with our clients the third money mistake we see retirees make is not having a hobby or a side hustle i like to call it so when you retire there's kind of two types of people i see in retirement and and my grandpas were like this and there's not a right way or a wrong way but staying busy is going to be good okay so when you retire don't just pack it in and don't you know do nothing you need to stay busy whether it's a hobby or a part-time job or volunteer whatever it is stay busy stay active it doesn't necessarily need to be an income stream it just needs to be it's more of a lifestyle decision so keep your body moving keep your mind moving keep it fresh that's going to have huge impacts and again why it's a money mistake is because a lot of people will hit retirement they sit on the coach they watch too much tv and they create health issues and health issues can cost a lot of money i know we have a good health care system in canada but trust me i see retirees spend tens of thousands of dollars on specialized health care every year so you know make sure when you hit retirement you stay busy you stay active you keep your mind going so that you don't run into financial issues down the road from health issues that derive from you know that transition into retirement so the fourth money mistake that we see retirees make and this one is going to hurt your pocketbook the most that we see is not planning for taxes around multiple income streams and i've talked to this in other videos but when you retire you will have multiple different streams of income and each stream of income will take its taxes or withhold taxes accordingly okay so before you retired you probably had one income stream and that was your paycheck so when you got your paycheck they withheld the right amount of tax so that when you did your taxes in you know march or april you had already prepaid the perfect amount of tax so maybe you got a small refund or a small amount due but it was it was nominal now when you enter retirement you have cpp oes maybe a pension plan rental income rift income there's a lot of sources of income when you hit retirement it's a very different world what happens is let's say you have thousand dollars of income you have let's just for simplicity oas cpp um a pension your rift income and a rental property okay rental property there'll be no withholding tax your pension looks at it as hey you only make ten thousand dollars so they only withhold a very small amount of taxes like i'll probably close to zero um your rif same thing maybe you're only pulling out the minimum rift amount which again there's no withholding tax and your cpp and ois you can have withholding taxes like held at source but again it's very nominal but at the end of the day when you take 50 000 of income you're gonna owe a fair amount of tax okay so make sure you plan ahead for that so you can kind of put all your different um retirement income streams into an income tax calculator and we'll put a link to one below that you can use so just add up all your income sources in retirement put it in there and it's going to tell you roughly how much tax you're going to have to pay in that year the benefit with that is then now you can look at all your income sources to see how much tax is actually being withheld okay then when it comes tax times if you owe eight thousand dollars in tax it's not a surprise you knew it was coming you plan for it and you put money aside for that but again that is a huge money mistake we see retirees make is moving from one income stream to multiple and not planning for the taxes due and the fifth and final money mistake we see retirees make is not planning for health care expenses so health care expenses obviously can be very expensive depending on what province or territory you live in in bc for instance where i live there's something called fair pharmacare and that can kick in and help you and you know basically once you spend up to a certain amount on certain health care expenses then the government kicks in and pays the majority and eventually all of your healthcare expenses in certain categories and criteria but not everything so just be aware as you enter into retirement your work plan you may be able to continue with your work plan so check into that with your hr department there are independent plans as well so if you're looking to retire in the next little bit manulife and blue cross both have options heading into retirement now there's two options that you really need to focus on if you have current health issues or you're on current medication both blue cross and manulife offer plans that there's no medical underwriting so as long as you uh sign up for their new plan within 60 days of retiring or leaving your old plan there's no medical underwriting okay if you are not on any medications or health issues then you will want to go to a fully underwritten plan it's a bit less money premium wise it'll cover a bit more but again if you are already on medication there are options out there to continue with that so again you have to look at the cost of the healthcare benefit versus what you're actually going to use so a lot of our clients we've done a cost analysis on it and at the end of the day it's worth it for most retirees that we've come across to pay out of pocket but a lot of work plans you're allowed to continue on at a very decent rate so make sure to check into that that's usually the best plan again if you can't carry on and you're on some medications maybe look at manulife or blue cross manulife has a product called follow me and it's basically that it follows with you even after you leave your employer so and this isn't just when you retire it's when you leave any work plan so you could be in your 30s leaving a work plan maybe you're going to self-employment or company that offers no plan this would be an option for you as well so consider health care costs when you enter retirement you know they can get quite high obviously depending on what kind of healthcare you need heading into retirement so just make sure to calculate that in it's got to be a line item in your budget for retirement and make sure you have enough money set aside to pay future expected healthcare costs which i know are very uncertain but just have a plan in place so that if the what if happens that you're you know you're prepared for it you have some money for it and you plan to head for that so thanks so much for joining us today in the five month mistakes we see retirees make if you are in retirement and you've made a few money mistakes that you like to share and just help others in our community out leave a comment below we'd love to hear you know the mistakes that you've made how you've rectified it or maybe you're entering retirement and you see a possible money mistake that you've kind of triggered as a red flag to you you have a question about it again leave your questions below we'll make sure to answer those as quick as possible for you so thanks again for joining us today we really appreciate you watching our channel tuning in make sure the thumbs up button it really does help get our video to more people and trust me more canadians need to hear this content they just don't have enough of this financial information so thanks again have a great day you

Channel: Parallel Wealth

Views: 157,705

Keywords: Financial Planning, Retirement Planning, Estate Planning, Retirement, Tax Planning, Investing, Real Estate Investing, Stocks, Bonds, Savings, Passive Income, RRSP, TFSA, Wealth, Parallel Wealth

Id: bCOrIEKyC9g

Length: 11min 44sec (704 seconds)

Published: Tue Apr 27 2021