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Managing your retirement

By Jim Gordon and Leeta Liepins
Published 11:21 PST, Fri January 31, 2025
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As part of our Healthy Horizon segments, Our City Tonight (OCT) sat down with a wealth advisor for CIBC Wood Gundy, Brandi Lockhart (BL). She is an expert wealth advisor and has a large senior clientele base, providing them with sound financial advice as they move into their retirement years.
OCT: Let’s talk about tips on how to maximize retirement income.
BL: Maximizing retirement income generally involves the use of a few different strategies. One of these is taking advantage of government pensions, private pensions, tax efficient withdrawals on personal savings, and then also optimizing those personal savings.
When you think about government pensions, Canada Pension Plan CPP and Old Age Security OAS, a lot of individuals don’t know that they can delay those pensions up to the age of 70. When you look at these pensions, you’re entitled to the first payment and to your full payment amount at age 65. But you can delay payments up to the age of 70 and each month that you delay being paid your monthly payments will be more money. With OAS, for example, you are entitled to 7.2 per cent more per year and if you delay being paid all the way up to 70 years of age then that’s going to give you an extra 36 per cent in income on your OAS. With CPP that is an additional 8.4 per cent per year, so there is a little bit more on that one for a total and if you delay each until you are 70, then that will be up to 42 per cent in income per year.
Looking more deeply into the OAS there is a clawed back clause. What that means is if you make over a certain amount of money, that threshold for 2024 is just under $91,000, then your OAS starts to get clawed back and will mean you start getting less and less. Once you reach just around $150,000 then the OAS is fully claw backed. What this means is, you do not get any bonus for the following year. Therefore, some strategies you can think about would be with your RSP‘s. You have to turn your RSP’s into a Retirement Income Fund (RIF) at age 71 and then you have to start taking your payments at age 72. But you don’t have to wait you can start taking your RSP’s a little bit earlier to prevent yourself from being in a higher tax bracket in the future. This is all going to depend, of course, on your health and individual tax situation. Another thing is being able to maximize your Tax Free Savings Account (TFSA) and keep in mind anything within a tax-free savings account grows completely tax-free. Any withdrawals from your TFSA are not added to your tax income. So, using your TFSA helps with your taxable income.
If you’ve never contributed to a TFSA, this type of account began in 2009, and you are actually able to deposit $95,000 as of 2024. That is a large amount of tax-free money there. And the last thing I would say on this topic would be the concept of pension splitting. You can split certain pensions with your spouse. This includes RIF income, company pensions, private pensions, and annuities. This will actually reduce your taxable income as well.
OCT: There is something that is coming up more and more where people are talking about the fact that as they grow older, seniors are living longer because they’re healthier, they’re exercising and watching what they eat which raises the question, how to handle finances so that they do not outlive their savings.
BL: That’s a great question and it’s the number one question for most of my clients. Of course, there is no guarantee that this is going to happen but a strategy I would suggest is first, to make sure you have a financial plan. Work closely with your wealth advisor and have a retirement plan completed.
A plan will show you how long your savings are projected to last in retirement. This is based on your lifestyle needs and to factor in any pension income that you are going to be getting in retirement. You also need to factor in healthcare costs or long-term care costs. Put that all in your retirement plan along with the timing of CPP and OAS, plus RIF withdrawals. Then reviewing that plan is so important even if you are already retired. Basically, you should have a retirement plan so that you know where you stand and then review it consistently.
OCT: You must come across this often with your clients, wondering how they can balance their conservative investments with potential growth in their portfolio.
BL: I talk about this every day. There are multiple factors that come into play with that question which include your time horizon, your risk tolerance, your income needs, and then of course your nest egg that you’ve been able to save. When you look at your time horizon, for example, the longer your time horizon is, the more risk you can take.
You can include more growth or assets in your portfolio. On the other end of it, if you have a shorter time horizon, you’re going to have to have much safer investments within your portfolio. The next thing you want to think about is your risk tolerance. If you have a really long-time horizon, you could take as much risk as you want. But you have to make sure you’re comfortable with that because the more risk you take, the more growth you have, and the higher the volatility. You must make sure you’re comfortable with that volatility by balancing out the portfolio. Maybe you need to have more conservative investments to make sure you’re comfortable.
OCT: Please tell us a little about meeting with clients and potential clients. In fact, walk us through the first couple steps you need to take in order to work with a financial advisor.
BL: Every family and client that I work with is different. They all have different goals and objectives, and I want to make sure that I get to know these clients and build a relationship with them. Then I am able to know what type of wealth strategy to approach them with and the types of tools and resources to use as well. I do understand that life happens so events will happen that are planned or not planned. You always want to make sure that you have ongoing communication and to build up a trust, and that is critical to a successful relationship.
To watch the video interview in full go to richmondsentinel.ca/videos