NOVEMBER 21, 2024

Top 5 Financial Moves to Make in Your Fifties

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RETIREMENT PLANNING

Your fifties are a crucial time for financial planning. Retirement is near, and the decisions you make will play a big role in ensuring financial security in your later years. Whether you're catching up on savings or fine-tuning your plans, here are the top five financial moves to make in your fifties.

1. Maximize Your RRSP and TFSA Contributions

As you enter your fifties, it’s crucial to maximize your contributions to retirement savings accounts such as your Registered Retirement Savings Plan (RRSP) and Tax-Free Savings Account (TFSA). When you file your 2024 tax return, your RRSP contribution limit will be 18% of your previous year's income, up to a maximum of $31,560. Also, any unused room from previous years will be carried forward. The yearly TFSA contribution limit is $7,000 for this year and any unused room from previous years also carries forward.

Why is this important? 

Your fifties are often your peak earning years, and using these tax-advantaged accounts allows you to lower your taxable income (in the case of RRSPs) and grow your savings tax-free (TFSAs). Maxing out these contributions can make a big difference in building a retirement nest egg.

 2. Pay Off Debt with Focus on High-Interest Loans

Debt management is crucial as you head toward retirement. High-interest debt—like credit cards or personal loans—can drain your cash flow and limit your ability to save. Focus on eliminating high-interest debts first.

3. Review Your Retirement Plans and Government Benefits

Take some time to review your retirement goals. Think about when you’d like to retire and what kind of lifestyle you hope to have. This includes reviewing your Canada Pension Plan (CPP) and Old Age Security (OAS) benefits. CPP can be taken as early as age 60, but the earlier you take it, the smaller your payments will be. The longer you delay (up until 70), the larger your payments will be.

By reviewing these benefits now, you can decide how they fit into your overall financial plan. It’s also a good idea to use online retirement calculators such as the Pension Calculator on the PEPP Website to estimate your needs in retirement and see if your savings are on track. 

 4. Diversify and Rebalance Your Investment Portfolio

If you are currently in higher risk investments, it might be time to shift towards more conservative investments. The PEPP Steps Fund is a lifecycle investment fund made up of 13 steps. Members enter the PEPP Steps Fund at the step that matches their age. This fund automatically moves members to more conservative asset mixes over time. Talk to one of our RICs to find an investment strategy that’s right for you. 

5. Plan for Healthcare Costs in Retirement

Healthcare costs are often overlooked in retirement planning, but they can be pricey, especially in Canada. While our healthcare system covers many basic services, there are still out-of-pocket costs for things like prescription drugs, dental care, vision care, and long-term care. 

Consider purchasing *extended health insurance* to cover these expenses or set aside savings specifically for health-related costs. It’s also wise to look into long-term care insurance, as the cost of care in retirement homes or nursing facilities can be high. Planning for these expenses now will help you avoid financial strain later.

Your fifties are a crucial time for setting yourself up for a comfortable retirement. By following the above steps, you’ll be better equipped to enjoy your golden years with peace of mind. Acting today will set the foundation for a more secure and stress-free retirement.

If you would like to learn more, we are here to help! Our Retirement Information Consultants have various financial planning designations and are available to help you with your financial literacy journey. 

To book an appointment, call 306-787-3170 or email: ric@plannera.ca.