Prep for Retirement: 4 Must-Do Steps!

Author: Mike Erickson

Retirement is often associated with the idea of having unlimited time to do all the things that one couldn’t do while working. Although this sounds amazing, many Canadians are unsure about what they want to do during their retirement. It’s important to remember that having a financial plan for retirement is just as important as planning to retire. In this blog post, we will discuss the four things that you need to do before you retire.

We have all been taught the importance of saving for retirement from a young age. We were encouraged to invest in RRSP’s and to aim for a job with a Defined Benefit plan. What used to be Freedom 55, these days, seems to be more like Freedom 65+. Canadians are living longer and are happy to keep themselves busy, even if that means working part-time – not because they have to, but because they want to.

The objective of retirement planning is to save up enough money to replace your income for a prolonged period. Most people concentrate on accumulating assets to achieve this. However, many Canadians fail to plan for their desired activities, hobbies, and recreational lifestyle during retirement, along with the associated costs. Therefore, it is crucial to have a clear roadmap of your financial retirement plan before embarking on this journey.

Here are four financial steps you must take before you retire.

1. Be Debt Free

Being debt-free means that all your hard assets, such as your home, vehicle, recreation property, trailer, boat, or other tangible assets, are paid in full. This will ensure that the money you live off each month goes towards your lifestyle and not to service debt. Although there will always be fixed and unfixed expenses such as property tax, insurance, utilities, food, fuel, etc., whether you’re sitting at home or on a beach, it’s crucial to have your hard assets paid off.

2. Diversify your Investments

Diversifying your investments means having options on how and where you are pulling money from to live during retirement. Depending on your personal situation, you might be drawing down your RRSP’s, pulling money from your corporation, or using your Canada Pension Plan and Old Age Security. Before retiring it’s important to have the appropriate accounts open to complement your retirement income. One of the most useful accounts to have is a Tax-Free Savings Account (TFSA). TFSA’s offer great flexibility when it comes to life events. Whether you need to purchase a vehicle, go on a trip, have a health scare, or need to make home repairs, a Tax-Free Savings Account can allow you to use after-tax dollars for these types of instances without paying tax on that money.

3. Take Care of Big-Ticket Items

As you approach retirement, make a conscious effort to have all your significant expenditures taken care of. Whether it’s purchasing a motorhome, the new roof, or the renovation you’ve been putting off for years, it’s crucial to have them completed before you retire. We want to avoid large expenses during retirement, as the next few years are spent on decumulation and not accumulation.

4. Take a Test Drive

Prior to retirement, it’s a good exercise to start living as though you are already retired. Most people believe that they can switch to a reduced budget easily, but this is often not the case. Take three months to start living within your retirement budget to get a sense of what to expect.

Following these four tips will put you on the right track towards a predictable yet flourishing retirement. It will also give you the power to make informed decisions in case things don’t go as planned. If you want to ensure that you’re on track for your retirement, feel free to reach out to one of our trusted advisors.

Connect Wealth is an independent financial planning firm that offers holistic advice to clients based on their current goals and future aspirations. We use well-established workflows and cutting-edge technology to maximize planning efficiencies while simplifying the process for clients. Learn how you can maximize your financial opportunities at

Watch the Video

Embark on a journey towards a secure and fulfilling retirement with Mike Erickson, in this episode of The Money Minute. Join us as we explore the four key strategies that guarantee a worry-free retirement.

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