Planning your roadmap to retirement
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The closer you get to your retirement date, the more questions you're likely to have (and the more pressing finding the answers becomes). In this issue of our member newsletter, we're tackling a few of the top questions we receive in relation to retiring. And, of course, we're always just a call or email away if you have more!
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HOW MUCH MONEY DO I NEED TO RETIRE?
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It’s one of the most important (and frequent) financial questions people have. The honest answer? It depends.
That may not be the concrete solution you were looking for, but in reality the amount you need in retirement is highly individual, influenced by everything from where you live to the lifestyle you want for your later years. Your financial needs will be shaped by your post-retirement income and expenses, too, so it’s essential to consider how those will look as well.
The typical recommendation is to aim for at least 70% of your pre-retirement income for each year of your retirement. But exactly how much you’ll truly need depends on your unique circumstances.
Here are some things to consider when determining how much you’ll need to retire. Your responses will help give you a picture of how much money you need – whether it’s the same amount you’re earning now or less.
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Retirement doesn't mean you have to stop earning income (if you don't want to). In addition to your investments and CPP, many people continue earning money through consulting/freelancing, turning hobbies or passions into small businesses, or taking on seasonal work to stay active.
When you think about retirement, do you see yourself stopping work entirely? Or do you plan on working to supplement your income?
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Most people think about the changes to their income after retirement, but your expenses will change, too. You might spend less money on savings, housing, taxes and transportation to work. But other expenses, such as hobbies, travel, utilities and healthcare, might increase.
Do you have outstanding debts or loans that will carry into retirement? What are your current utility costs and will those change in retirement? Are there hobbies you’d like to take up that might come with expenses?
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Picture your ideal retirement scenario. What do you dream of doing? Are there activities you’ve been putting off until retirement? Do you have a list of places you want to visit or experiences you want to have? Is your goal to stay in your current home or would you love to relocate to a new community with a different pace of life? What kind of lifestyle changes are you envisioning and how will they impact your daily life?
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You’ll need a lot more in savings if you want to retire at 55 than you will at 70. Consider what your ideal retirement age is and why. What factors affect your decision about when to retire (such as health, job requirements, milestones, or quality of life)? Do you have a plan in place to cover the income gap if you retire before you’re eligible for your full CPP benefits? How will retirement at different ages affect your financial goals and lifestyle?
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There’s no right or wrong answer to the above questions. What’s important is that you consider what matters most to you in retirement, then plan your finances around that.
Check out our Wealth Calculator to see how much you can pay yourself during retirement.
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How do I view my SPP performance?
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Check in on your progress quickly and easily:
- Log into MySPP with your account number and password.
- Go to “Account Balance.”
If you have any questions about your account, reach out, we’re here to help.
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WHEN CAN I COLLECT MY SPP PENSION? WHAT ARE THE OPTIONS?
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When it comes to planning for retirement, you have plenty of flexibility. If you’re eager to retire early and okay to stretch your savings, you can start collecting your pension as soon as you turn 55. If you’d prefer to wait and accumulate as much as you can, you can delay collecting until as late as age 71. This window allows you to build your retirement to suit your personal goals, financial needs and retirement vision.
When it’s time to collect from SPP, you have a number of options available.
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Choosing an SPP annuity gives you the comfort and security of a regular monthly income that lasts a lifetime. Your monthly payment is determined by your account balance, the type of annuity you choose, interest rates, your age and your spouse’s age (if applicable).
The best part? You’re guaranteed the same dependable monthly income for the rest of your life. You can focus on enjoying your retirement, knowing your finances are taken care of.
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This option provides the flexibility to collect what you want, when you want. Whatever you don’t withdraw remains actively invested in SPP’s funds, so you continue to benefit from ongoing growth potential with low fees. You have the flexibility to decide how much retirement income you access each year (required minimum starts at age 72), making you ultimately in control of how long your savings last.
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If need be, you can also choose to transfer all or a portion of your funds to another financial institution. In this case, you assume all the risk for managing your investment.
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You also have the option to withdraw a portion of your funds to another institution, while leaving the remainder with SPP as an annuity. This allows you to benefit from a guaranteed monthly payment for life from your SPP balance (albeit reduced based on the amount transferred out).
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The best option for you depends on your individual needs, what you want from your pension funds, your investment knowledge, and how much risk you’re comfortable with.
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Learn more about your options and how to collect your pension
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Check out our Pension Guide and Variable Benefit Guide for more in-depth information about collecting your pension, including frequently asked questions and important considerations, or visit “When You’re Ready to Collect” for more information.
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