A poll released by the Royal Bank of Canada in September 2012 shows that many Canadians who have retired didn’t get to choose their retirement date. Only 62 percent of Canadians polled who have retired were able to dictate their retirement start date.
Reasons for Unplanned Retirement
Three cited reasons for unplanned early retirement were the need to become a caregiver, health reasons, or a request from an employer for an early retirement. All of these scenarios could blindside your retirement plans and keep you from putting away as much as you need to retire on. The poll also found that the amount of time between being notified of the reason to retire early and the actual date of retirement was short, which doesn’t allow for reasonable financial planning.
Investment Advice for Potential Early Retirees
The summer of 2012 wasn’t a good time for the stock markets as a rule. With thousands of Canadians poised to retire on their nest eggs in the next couple of years, this advisor suggests pulling back into safer havens for your investments rather than doubling down and investing more heavily in the stock market. It’s sobering advice that should help your investments weather future storms in the stock market in the crucial years before retirement, if you are lucky enough to have significant enough investments to retire on.
Protecting Against Downsizing
The article on the poll in the Globe states that older employees are more likely to be let go because of their typically larger wage packages. While this is the case, there are ways to negotiate with your employer if they target you for a downsizing move. You can offer to come in as a consultant, do part-time work, or perform other tasks that continue to generate income for you. Employees staring down the barrel of this particular dilemma are so blindsided by a downsizing request that they fail to negotiate terms that could be financial lifesavers for their retirement. Being experienced employees, they hold more cards than they often realize.
Needs Versus Wants Important to Define
If you do have to retire earlier, it is important to draw up a list of needs and wants. This chart may be different for many people. Some may need to travel once a year, where others will list life basics as needs such as life basics like food, shelter, and utility bills. If an unexpected early retirement comes up, you may need to move some of your needs onto your “wants” list.
Reverse Mortgages Can Help
A reverse mortgage can slay the dragon of forced early retirement by taking care of debts or paying for things that you don’t really want to move to your “wants” column. You can take out a reverse mortgage starting at age 55 if needed. With interest rates being so low, now is a perfect time to lock in a reverse mortgage. If you want to explore a reverse mortgage as a financial instrument to subsidize your retirement, contact Horizon Equity today.