Entering your 70s is a significant milestone that often brings new financial considerations. At this stage of life, you’ll likely be fully retired and relying on your savings, pensions, and government benefits for income. It’s a time to focus on preserving your wealth, managing your healthcare costs, and ensuring your estate is in order.
In this article, I provide a comprehensive financial checklist for those in their 70s.
Review Your Retirement Income Strategy
Look closely at your various income sources, including pensions, RRIFs, and government benefits. Make sure your withdrawal strategy is sustainable for the long term. If necessary, consider adjusting your budget to match your current lifestyle and income. It’s crucial to balance enjoying your retirement with making your money last.
Manage Required Minimum Withdrawals
At age 71, you must convert your RRSP to an RRIF and start taking minimum withdrawals. Understand the withdrawal rules and plan for the tax implications. Consider strategies to minimize taxes, such as income splitting with a spouse. Remember, you can withdraw more than the minimum if needed, but not less.
Optimize Government Benefits
Ensure you’re receiving all the government benefits you’re entitled to, such as Old Age Security (OAS) and Canada Pension Plan (CPP). Be aware of income thresholds that could affect your OAS payments. Consider strategies to avoid or minimize the OAS clawback if your income is high.
Review Your Investment Portfolio
Reassess your investment mix to match your current risk tolerance and income needs. You may want to shift to more conservative investments to protect your capital. However, don’t forget the need for growth to combat inflation. Regular portfolio reviews are crucial at this stage.
Update Your Estate Plan
Review and update your will, powers of attorney, and healthcare directives. Ensure your beneficiary designations on retirement accounts and insurance policies are current. Consider discussing your plans with family members to avoid confusion later. It may be helpful to consult with an estate planning attorney.
Consider Charitable Giving Strategies
If you’re charitably inclined, explore tax-efficient ways to give. Consider options like donating appreciated securities or setting up a donor-advised fund. Qualified charitable distributions from your RRIF can be a tax-efficient way to give. Charitable giving can be a meaningful way to leave a legacy.
Assess Your Housing Situation
Evaluate whether your current home still meets your needs. Consider if downsizing or moving to a more accessible home might be beneficial. Look into options for aging in place, such as home modifications for safety and accessibility. Your housing choice can significantly impact your finances and quality of life.
Review Your Insurance Needs
Reassess your life insurance needs, as you may need less coverage than before. Consider whether you still need disability insurance. Look into whether you have adequate coverage for things like home and auto insurance. Insurance needs often change in retirement, so regular reviews are essential.
Stay Informed About Tax Changes
Keep up to date with tax law changes that might affect retirees. Understand how different types of income are taxed in retirement. Consider working with a tax professional to optimize your tax strategy. Smart tax planning can help you keep more of your hard-earned money.
Plan for Healthcare Costs
Healthcare expenses often increase as you age. Review your health insurance coverage and consider purchasing additional coverage if needed. If you haven’t already, look into long-term care insurance options. Set aside funds specifically for potential healthcare needs.
Plan for Cognitive Decline
Consider setting up a system to manage your finances in case of cognitive decline. This might include setting up automatic bill payments or designating a trusted person to help manage your money. Discuss your wishes with family members while you’re still able. Planning ahead can protect your finances and reduce stress for your family.
Explore Senior Discounts and Benefits
Take advantage of senior discounts and benefits that are available to you. This might include reduced fees for public transportation, entertainment, or education. Look into property tax relief programs for seniors in your area. These savings can add up and help stretch your retirement income.
Manage Debt
If possible, aim to be debt-free in retirement. If you have debt, create a plan to pay it off. Be cautious about taking on new debt at this stage of life. Remember, entering retirement debt-free can significantly reduce financial stress.
Stay Vigilant Against Fraud
Be aware that seniors are often targets for financial scams. Educate yourself about common fraud tactics targeting the elderly. Be cautious about sharing personal financial information. If something seems too good to be true, it probably is.
Consider Working with a Financial Advisor
If you haven’t already, consider working with a financial advisor specializing in retirement planning. They can help you navigate complex financial decisions. An advisor can provide objective advice and help you stay on track with your financial goals. Regular check-ins with a financial professional can give you peace of mind in your 70s and beyond.
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