It’s traditionally been the magic age of retirement but with people living longer than ever before, it doesn’t always make sense to quit working simply because you’re 65 years old.

“It’s just a date. So many benefit programs traditionally start at 65 — Old Age Security (OAS), Guaranteed Income Supplement, Canada Pension Plan (CPP) and most pensions — that people think they should retire or think about retiring at that age,” says Dave Ablett, director of tax and estate planning at Investors Group in Winnipeg, Man.

He points to a survey commissioned by Investors Group that indicates 42% of people aged 45 to 65 would like some form of phased-in retirement. “Some people may be forced to continue working for financial reasons, especially if they’re not members of a registered pension plan,” Ablett says.

The earlier you start planning the better. “It would be great if you could seriously start thinking about it 10 years in advance and certainly within five years of your target (phased-in retirement) date,” says Ablett.

The first step is to determine if you’ll have the necessary financial resources. “Do an inventory of the monies you’ll have available in your retirement years: pension, Registered Retirement Savings Plan, Tax Free Savings Account, personal savings, a second property you may choose to sell,” he says. “Look at when you’ll be eligible to receive CPP and OAS.”

Next, consider your lifestyle expenses. “A lot of people think their lifestyle expenses in retirement will decrease significantly … but if travel is an important part of your retirement goals, expenses may increase,” Ablett says. “Some may want to work nine months of the year and spend the other three travelling.”

A financial planner can put together projections of how much you’ll spend in various scenarios but flexibility is important. “Some may pursue a second career and may be more successful in that career than their first,” says Ablett. “If the desire for the second career is to spend more time doing volunteer work, they’ll see a significant drop in income.”

Ron, 62, and Carol, 61, Saucier are transitioning into semi-retirement. He’s a former high school teacher who took early retirement in 2008. Carol went from full-time work as a nurse to part-time work four years ago when she couldn’t find full-time employment. She also has a home business selling health and nutritious supplements.

“I remember having breakfast together one morning and thinking this is crazy — Carol was working so we could pay off our mortgage,” says Ron. The couple contacted their Investors Group financial adviser and put together a financial plan that included downsizing and relocating to a less expensive area.

They recently moved from Ottawa to Brighton, Ont., fulfilling their desire to be near the water and to have a have a home large enough to pursue his hobby of building model trains and her hobby of painting and playing the piano. Carol plans to look for a casual nursing job and Bob will continue supporting her home business.

Phased-in retirement is a fairly new concept that will require innovative solutions and flexibility by employers wanting to retain older workers, Ablett maintains. “Certainly, the government is starting to allow more opportunities for phased-in retirement in respect to RRSPs,” he says.

“You can now participate in and accrue benefits under a pension plan even when you’re receiving benefits from it. If companies aren’t ready now, they’re going to have to start phasing this in over the next five years, when the leading edge of the baby boomers will be retiring … Can they afford to let that expertise just walk out the door right now?”

Credit:  The Ottawa Sun |Wed Aug 8 2012
Page: 32 |Section: Business
Byline: LINDA WHITE, SPECIAL TO QMI AGENCY

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