Career Change & Early Retirement
from Ralph Vandervoort
Check these facts. Some of them could affect You:
- Myth: Most people need save only for no more than about 10 or 15 years of retirement.
Fact: The average number of retirement years has, due to increased life expectancy and earlier retirement, doubled.
- Myth: You will pay a smaller fraction of your income in taxes when you are retired.
Fact: Although your income tax bracket may fall (the now defunct Seniors Benefit would have put marginal taxes as high as 60%), consider other taxes such as municipal, PST and GST.
- Myth: Your employer will provide good basic health and dental insurance. The government will cover the rest of your bills.
Fact: Factor in the cost of private health care. Remember a pre-existing health problem will not be covered.
- Myth: If you stay with one employer your entire career, you'll have a richer retirement than if you hop to chase higher salaries.
Fact: Moving to a new position will sharpen your skills, increase your marketability as well as your income and RRSP limits.
- Myth: Purchasing a RRSP (as long as you are eligible) is always a good idea.
Fact: You may be better off with non registered plans and utilize a SWP (systematic withdrawal plan) for income as you approach those golden years.
- The Revenue Canada Alternative Minimum Tax (AMT) has retroactively been amended, allowing for greater flexibility regarding severance and retirement packages. All or part of your package may now be transferred to a RRSP.
- There are two options for converting from pension plans to income.
- There are three options for converting from a RRSP to income.
For further information see also the pages on Personal Financial Plans, Health & Dental Plans, Registered Savings Plans.