Investing in your 60s

You have now reached your 60s. That's great! For many, this is a time to start thinking about retirement, though it doesn't mean you have to stop working if you don’t want to. You may also be wondering what you need to do next when it comes to investing, how to best protect your money, and where to find other sources of income should you retire. Whether you're planning on working until your late 60s or retiring now, read on to learn more about making investment choices in your 60s.

Please note: Questrade does not provide tax or accounting advice. These materials have been prepared for your educational and information only and are not intended to provide, and should not be relied on for, tax or accounting advice. You should consult your own tax and accounting advisors for these matters.

You have two paths that you can possibly take when you reach your 60s. If you're still working, you may want to consider continuing to do so. Working longer can have some benefits: first, it gives you more time to save for retirement. Second, it allows you to postpone taking government pensions (such as the Canada Pension Plan and Old Age Security which can increase the amount you receive each month. Finally, if you have health insurance through your employment, you can continue to enjoy health benefits by working longer.

On the other hand, if you're planning to retire, there are a few things you should do to prepare. First, it's always best to know if you have enough money saved up to cover your monthly expenses. You need to ensure that you have an emergency fund that can sustain your daily living expenses for about six months. You'll also want to check and plan to have some health insurance in place, either through a retirement plan or a financial institution. Finally, you need to understand how you'll spend your time in retirement. This will help you determine the living expenses you’ll need and ensure you have activities to keep you busy and engaged.

Regardless of the decision you make, there are steps you can take to plan for a comfortable retirement. You know what they say, it's never too late to start!

There are a variety of options available to generate income in retirement, including annuities, pensions, and rental income. Each option has its own set of considerations, so it’s important to understand what each one entails before making a decision.

Annuities can be an option for some retirees because they provide a guaranteed stream of income. However, annuities also have some downsides, including (but not limited to) lower interest rates for payouts, higher fees, and they are typically not inflation-adjusted.

Government pension plans are another source of income for retirees. Here in Canada, we have a few options:

1. Canada Pension Plan
2. Old Age Security (OAS).

You can start applying for the CPP as early as 60 years old, and OAS at 65 years old, but will have different payment structures for both. To estimate how much income you can get from the CPP and OAS, please take a look at this calculator. 

You also have the option of deferring your pension until you are 70 years old, which can significantly increase your monthly pension. This is because of how your pensions are calculated, which is based on your age and income. Here are two main things to consider:

• The older you are when you receive your pension, the higher your payment will be.
• If you continue to work in your 60s, your total contribution to your pension and average earnings throughout your working life will also increase, growing your monthly pension.

Note: both income from the CPP and OAS are considered taxable income. Ensure you consult with your accountant or another financial professional if you’re going to start planning for your retirement.

If you have a property, a rental income is another stream of income that can provide monthly cash flow and equity. Typically, you want to ensure that you have enough revenue from rent that can cover monthly expenses (including utilities, mortgage payments, maintenance repairs, etc.) and give you a positive cash flow as a rental income.

Another way to have extra cash flow in retirement is to downsize your lifestyle - if you can’t increase your income, you can decrease your expenses. This might mean living in a smaller home or apartment, planting your own vegetables, driving a modest and energy-efficient car, and generally spending less money. While this may sound like a compromise for some, it can actually be a great way to free up extra money and live comfortably in retirement.

Finally, you can tap into investment income opportunities. Read on to learn more and determine your options!

One of the key things to keep in mind when you’re already investing is to continuously review your portfolio. This is especially important as you approach retirement, when you may want to consider shifting your asset allocation based on your changing risk tolerance. Of course, shifting to a different asset allocation will depend on your situation and goals. 

You must convert your RRSP to RRIF when you turn 71, which allows you to make minimum annual withdrawals to get retirement income. If you’re converting your RRSP to a RRIF before age 71, please note that withdrawals are considered taxable income and your minimum withdrawals will be lower than if you withdraw it at a later date. Please ensure you plan and consult with an accountant and advisor to best utilize your tax and saved up RRSP funds.

You may continue to work just to earn more income and save more, or you can retire happily while starting to access other sources of income and savings. No matter which option and investment plan you choose, it’s important to understand that it starts with your situation and financial goals.

With careful planning and patience, you can have better peace of mind that your retirement planning is on track, and you can enjoy a comfortable retirement in the future.

Note: The information in this blog is for information purposes only and should not be used or construed as financial, investment, or tax advice by any individual. Information obtained from third parties is believed to be reliable, but no representations or warranty, expressed or implied is made by Questrade, Inc., its affiliates or any other person to its accuracy.