Nearly everyone has been impacted by COVID-19 and its effect on the market. Most of us have seen investments and savings fall in early 2020 due to market fluctuations. On the positive side, the markets have regained a percentage of that loss. But the drop in the market has most of us wondering what to do about our retirement savings plans.
While each person’s situation is unique to them based on their age and retirement situation, here are some suggestions that you can discuss with your financial advisor:
If you have a defined benefit plan or pension
If you have a defined benefit plan or pensionPension A steady income you get after you retire. Some pensions pay you a fixed amount for life. Others save up money for you while you are working. You use that money to create income after you retire.+ read full definition, you may not need to delay your retirement if your plan is well-funded, healthy and hasn’t lost a lot of money. If your RRSPRRSP See Registered Retirement Savings Plan.+ read full definition and TFSATFSA See Tax-Free Savings Account.+ read full definition are also in good shape, you may be on track to retire on schedule.
If you’re close to retirement
If you are close to retirement or are retired, speak to your financial advisor about any changes you may need to make to your portfolioPortfolio All the different investments that an individual or organization holds. May include stocks, bonds and mutual funds.+ read full definition or adjustments you may need to make to your expected income during retirement in order to protect your cash flowCash flow The sums of cash a business gets in and spends out during a set period of time.+ read full definition so that you do not run out of money during your retirement.
Note that if you have a RRIFRRIF See Registered Retirement Income Fund.+ read full definition, the government has reduced the mandatory withdrawal requirement by 25%. For further information about this, click here.
Another option might be to delay your retirement for a few years. This will allow you to accumulate more savings and delay when you start to draw down your retirement savings. Note, you must withdraw the minimum amount from your RRIF the year you turn 71.
You may also consider delaying the age you start your Canada Pension Plan (CPP). Whether you should start taking CPP early, at age 65, or later (up to age 70) depends on many factors.
Your instinct may be to change your retirement plan, but it may be wise to stick with it if your financial circumstances haven’t changed. If your financial circumstances have changed due to job loss, business shutdown or illness, then talk to a financial advisor. They will need to know this information to provide suitable advice. They can also explain options like withdrawing from your RRSPs and TFSAs, and may help you to understand any relevant taxTax A fee the government charges on income, property, and sales. The money goes to finance government programs and other costs.+ read full definition implications.