Retirement can be a scary thought, especially for realtors whose income can be irregular. Without a formal work-funded pension plan, you may find yourself wondering when you can retire. The ultimate goal is to work because you want to, not because you have to.
Planning for retirement can be complex as each person’s income sources vary. From OAS and CPP to RRSPs, TFSAs, and rental income, there are many factors to consider. Understanding the rules and options for each income source is crucial to maximizing your retirement income and minimizing worries.
For example, a couple eligible for maximum CPP and OAS at age 65 could receive $48,800 annually, which covers basic living expenses. Starting early and planning carefully can help secure your financial future.
How to estimate your retirement income
Retirement income is a mix of various sources, so creating an estimate is essential. Consider factors like OAS, CPP, and other assets to plan your retirement income effectively.
1. Old age security (OAS)
The current OAS pension is $8,560 per year per person, starting at age 65. Income thresholds may affect the amount you receive, so it’s important to plan accordingly.
2. Canada Pension Plan (CPP)
The maximum CPP amount is $15,840 per year, with options to start early or late. Consider factors like dividends from your corporation when planning for CPP.
Preserve capital or die broke?
Decide whether to preserve capital or spend it during retirement. Factors like fees, taxes, and inflation can impact your retirement income, so plan wisely.
3. Registered retirement savings plans (RRSPs)
RRSPs can provide income for about $1 for every $22 in the account over 25 years, making them a valuable retirement asset.
4. Tax-free savings accounts (TFSAs)
TFSAs offer tax-free income, allowing you to spend about $4,000 to $6,000 per year for every $100,000 in the account.
5. Personal real estate corporation (PREC)
Consider the income generated by your corporation and decide whether to wind it up or keep it for tax purposes.
6. Rental properties
Rental properties can provide additional income during retirement, but expenses and taxes must be considered when estimating their value.
7. Cash savings
Savings outside of retirement accounts can supplement your income, but ensure you have a plan to generate consistent income and manage taxes effectively.
Once you’ve estimated your retirement income sources, tally up the numbers and plan accordingly to secure your financial future.
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This article was complied with AI assistance and reviewed by an editor. More information can be found in our T &C
