In this engaging episode of Fireside Financial, Joe and Regan dive into a range of retirement-related questions from their audience. Covering topics like CPP, pension plans, and retirement planning strategies, they provide insightful advice and analysis. They explore scenarios involving part-time work after age 60 and its impact on CPP, the decision-making process for defined benefit pension plans, and the advantages of delaying CPP payments.

They also tackle questions about the ideal timing for retirement planning and the implications of Tax-Free Savings Accounts (TFSA) on government income supplements. With a balanced blend of expert insights and practical examples, this podcast episode offers valuable guidance for those navigating the complexities of retirement planning in Canada.

What You’ll Learn in Today’s Episode:

Part-Time Work and CPP: Joe and Regan address concerns about the impact of working part-time between ages 60 and 65 on CPP payments. They clarify that such work won't negate CPP payments; in fact, it may improve them, as the CPP formula allows you to replace low-income years.

Defined Benefit Pension Plans: Exploring retirement options, they discuss the dilemma of taking a commuted value from a pension plan versus receiving a monthly pension. They emphasize that making such decisions depends on factors like required rates of return, risk tolerance, and legacy planning.

Optimal CPP Timing: The hosts analyze the question of when to start CPP payments. While advisors may recommend taking CPP early to relieve portfolio stress, delaying payments can often be more advantageous. Their advice is to assess factors like other income sources, survivor benefits, and required rates of return to determine the best approach.

Retirement Planning Timeline: They advise starting retirement planning as early as possible, ideally three to five years prior to retirement. A longer planning horizon allows for adjustments, testing income needs, and making necessary course corrections to ensure a comfortable retirement.

Realistic Retirement Income Testing:  Advocating for accurate planning, they suggest testing retirement income by living off the projected retirement budget for a year. This exercise helps individuals determine if their expectations align with reality and identify potential adjustments before fully retiring.

International Impact on CPP: They clarify that even if someone leaves Canada, they remain eligible for CPP payments, as contributions made to the plan cannot be withdrawn. The individual will receive the benefits corresponding to their contributions when they retire, regardless of their location.

TFSA and Government Income Supplements: The hosts explain that money earned within a Tax-Free Savings Account (TFSA) doesn't impact other income-tested benefits like the Guaranteed Income Supplement (GIS). Earnings within a TFSA remain tax-free, providing a valuable tool for retirement planning without affecting government assistance eligibility.

Ideas Worth Sharing:          

·       "I think a lot of common advice is to take CPP so you get income now so you can preserve your portfolio. But I also think that that maybe is sometimes self-serving for advisors. And if we actually look at the data, FP Canada has done a study on this, it really shows the advantage of delaying CPP."

·       "It does make sense to take additional money from your portfolio in order to get the full amount of CPP and maybe even delay it to age 70 again, depending on your other guaranteed income sources, if you have any, and your situation. But there's a lot to be said for the advantage that you're getting by delaying on the CPP.”

·       In terms of retirement, I think with COVID, a lot of people have decided to maybe speed things up, knowing life is short. On the other hand, I've talked to some business owners lately who are just like, you know what? Retirement is not even a goal. What am I going to do? I enjoy my business. I like working in it. It's fulfilling, and I don't know what I do if I stop working."

·        "Earnings within a TFSA remain tax-free, providing a valuable tool for retirement planning without affecting government assistance eligibility."

Resources in Today’s Episode:

Joe Curry

Regan Schiller

Retirement Planning Simplified – Joe’s website

Retirement Planning Simplified – Youtube Channel

Retirement Navigator – A holistic tool from RPS to help you plan your retirement

Your Canadian Retirement Specialist – Regan’s podcast

Your Canadian Retirement Specialist – Regan’s Youtube Channel

Regan Schiller & Associates | IG Private Wealth Management

Are You Nearing Retirement? – Article from Financial Planning Canada about being strategic when collecting CPP/QPP benefits

CPP

OAS

Mastering Retirement Planning: CPP, Investments, and Personal Goals - Joe Curry, Regan Schiller

Listen in for a deep-dive session with Joe Curry and Regan Schiller, your guides to financial wisdom and savvy money management. In this episode, Joe and Regan confront a myriad of listener questions about CPP and retirement financial planning. They begin with the impact of continued work on CPP after reaching 60. They both concur that one's CPP payment at age 65 wouldn’t be affected negatively by working between ages 60 and 65. They discuss defined benefit pension plans, weighing the pros and cons of accepting a commuted value versus a guaranteed income. They stress the importance of personalized financial strategies, reinforcing the fact that there is no one-size-fits-all solution.

In this episode, you will be able to:

·        Discover how income fluctuations play a crucial role in optimizing CPP calculations and benefits.

·        Delve into the power of choice and context in retirement decisions- comparing early retirement against ongoing employment.

·        Appreciate the rewards of early engagement in retirement planning for smoother financial transitions.

·        Challenge your draft retirement income plan by living it out for a year to highlight areas for improvement.

·        Fathom the effects of departing from Canada on your CPP contributions and the handling of TFSA earnings and withdrawals.

Plotting an Early Exit
Let’s touch on the concept of early retirement. It's enticing to imagine having all the time in the world to do what you love! Early retirement can be possible with a solid financial plan and enough savings to support your lifestyle. But there's no one-size-fits-all in retirement. While early retirement can be a dream come true, it's not for everyone. Some people find fulfillment in work and choose to prolong their professional careers. Both roads are worthy, so choose your own adventure.

Charting a Course with the Canada Pension Plan (CPP)
Sometimes, planning for retirement can feel like a complex puzzle. When it comes to deciding on whether to work part-time past 60 and its impact on Canada Pension Plan (CPP) benefits, it helps to know that CPP isn't rigid – it's designed to adapt to your life's twists and turns. Say hello to flexibility! With CPP, you can eliminate up to eight of your lowest-earning years from the calculation of your benefits, filling in any no-income gaps with part-time employment between 60 and 65. This means that you won’t be penalized for choosing to work part-time during those final years before retirement. Part-time work will not only give you some extra cash but also potentially boost your CPP payments.

The resources mentioned in this episode are:

·        Check your income between ages 60 and 65 to see if it would affect your CPP payment at age 65.

·        Consider working part-time after age 60 to increase your CPP amounts.

·        Evaluate your defined benefit pension plan options, including taking the commuted value or opting for a monthly pension.

·        Calculate the required rate of return to match the pension income and assess your risk tolerance.

·        Consider your long-term financial goals, such as leaving a legacy or maximizing retirement income.

·        Assess other sources of income in retirement and how they will impact your overall financial situation.

·        Determine if taking the commuted value of your pension plan and investing it for a period of time would be beneficial.

·        Understand the survivor benefit options and how they would affect your spouse or beneficiaries.

·        Verify if the projected CPP amounts on your Service Canada page assume continued contributions until age 65.

·        Calculate your lifetime average salary to estimate your CPP payment at age 65.

You can always reach out at info@retirementplanningsimplified.ca to continue the conversation or follow up with your questions. You can also visit retirementplanningsimplified.ca to download our “Retirement Navigator”, our holistic retirement planning tool.