It used to be that Canadians would work most of their lives for the same company before retiring at age 65 with full government benefits and pensions that would meet their needs without additional income. This type of traditional retirement, however, is no longer the norm and, while many Canadians are “retiring” at younger ages, it often comes in a very different form than that of their grandparents and parents.
Nowadays, retirees are much more likely to continue to work in a part-time or consultant capacity in order to supplement their pension plan. The goal of retirement is no longer to retire completely from the workforce and live a life dedicated to travel, grandchildren, or hobbies. Now, retirees are looking for one thing: financial independence.
Financial independence refers to reaching a point in your life where your career and lifestyle are no longer predominantly controlled by financial necessity. It is possible to achieve this long before traditional retirement age, allowing you to build a sizable nest egg for a comfortable retirement while working less or changing career paths to something you enjoy more.
Work at what you love
While it is not always possible to find the job you love at the price you require to live comfortably, retirement or near-retirement can be a good time to do just that.
Working at something you are passionate about it a great way to extend your working years and will help to keep you active and engaged longer in life. Whether you make the switch now and plan to work later into your 60s or make the switch after retiring from your current career path, working part-time or contractually until or past 65 is a great way to ensure you will continue to live comfortably when you are no longer able to do so.
Protect your savings
Thirty years ago it was easy to save money for retirement: government bonds paid out at rates of 10-15% interest making them a sure bet for retirees. Today, bonds are likely to pay only as much as 2%, hardly a worthwhile investment for your retirement.
Instead, experts recommend keeping a good portion of your savings in low-risk investments and using the rest to boost your income.
Boosting your income
Fixed-income investments are great for protecting your principal, but they won’t do much to grow your wealth. In order to stay ahead of inflation and ensure a comfortable retirement, investors often recommend that a person invest a reasonable portion of your portfolio in dividend-paying stocks. They suggest you look for well-managed, stable companies in reliable industries that pay out a reasonable portion of their profits.
Cash in on your home
Thanks to the enormous boom experienced in the Canadian housing market over the last several years, homeowners today are sitting on a lot of money. Retirees who have completed their mortgage payments would do well to consider downsizing in order to cash in on that value. Homeowners can also make use of reverse mortgages to borrow against their home’s value without moving.