The recession has definitely set back more than a few retiring Canadians which means they will have to work a little longer than planned. That could mean another year, or for others, it could mean another few years. If you're looking for tips on places to invest other than stocks and real estate, here are some ideas that may help you reach Freedom 65 after all.
Many economists are suggesting people look at their invisible assets. First up on the list, government pension plans including CPP / QPP and Old Age Security. If you've worked in Canada your entire adult life and retire at 65, you are entitled to Canada Pension Plan benefits. You are also entitled to Old Age Security pension simply by living in Canada for a substantial period of your life. These government programs often provide more than people expect. Between CPP / QPP and OAS, you can be paid a combined $17,000 per year. Also, government stipends cover a large amount of your basic living costs. Assuming your house is paid off and your kids have moved out, one can easily live off 50% to 60% of what we earned during the working years.
The simplest way to add extra money to the retirement nest egg is to work longer, so it may be beneficial to think Freedom 68. For each year of additional employment, you will benefit in at least three ways. First, additional work gives your investments time to recover from the recent recession downfalls while secondly, it reduces the amount of years you have to live off of them. Third, you will increase the amount you will receive from pensions as CPP payments increase 6% a year for each year you delay drawing on those payments up until you turn 70.
If you're not keen on freedom 68, it pays to look at some of your invisible assets such as personal skills and workplace pensions. Most Canadians ignore their workplace pensions, and often, your pension may be worth more than your home by the time you reach your fifties. The most common is the Defined Contribution Plan, which allows you and your employer to contribute a predetermined amount to your pension. The limit is often matched dollar-for-dollar and keeps the value away from things such as the potential pitfalls of the stock markets.
During retirement, your personal skills can easily earn you income after retiring from a full-time job. Indulging in a hobby you love or taking on a side business can also bring in extra stress-free cash. The key to all this, however, is to stay out of debt and add to these pensions. If you are considering debt consolidation but have bad credit, there are even private lenders out there who specialize in loans for individuals with bad credit.
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