Westworld Alberta

government's Department of Labour, between 1987 and 1990, 29 per cent of Canadians retired before the age of 60. Between 1997 and 2000, that rate grew to 43 per cent. However, investment decisions can make or break retirement plans: the recession of 2008 convinced a third of baby boomers to postpone retirement for at least a year, according to a 2011 Conference Board of Canada survey. A market downturn is far more perilous to a 55-year-old investor than to one aged 45 or 35. This is why many people begin to further diversify their portfolios into stable products to avoid unwelcome surprises. "At the age of 55, you typically see about 30 per cent of a portfolio in GICs, which offer a guaranteed rate of return and will always preserve your principal, earning interest at a fixed rate (or a variable rate according to a predetermined formula), and the rest is in a registered product," Petonjic-Rogers says. "You see a general trend to move out of the high risk products into more secure products." This is also the time when you want to get serious about paying off debts, such as your mortgage. Because at this time, the only fees you'd like to be pay- ing are green fees. The Hunkered-Down 60s Ideally, by the time an investor is a sexage- narian, fi nancial planning mainly involves avoiding surprises and pinpointing the exact date retirement can occur. "A lot of people in this category want stability and peace of mind," Petonjic-Rog- ers says. "They don't want to be wiped out by the market. So even if interest rates are low, they want to know they will always have X amount of money available." At some point in your 60s, you will likely want to convert your RRSPs into a Regis- tered Retirement Income Fund (RRIF). (The conversion becomes mandatory at age 71.) RRIFs are tax-free accounts that allow unlim- ited withdrawals and require a percentage of withdrawals annually, which are taxed as income. If you didn't start planning until later in life, it's not too late. There are still decisions that can make for a more comfortable retire- ment. Working a year or so longer than you originally planned may help pay down remaining debts, create a fi nancial cushion and forgo any drawbacks from drawing on your Canada Pension Plan (CPP) benefits before you hit 65. The CPP is a monthly benefit paid to individuals over 60 who have made a con- tribution to the program during their work- ing years. In January 2011, changes to the plan were instituted. Among other adjust- ments, you now can choose to start receiv- ing your CPP benefi ts at age 60 instead of 65. If you do so, you'll receive smaller pay- ments. So how do you decide when to begin drawing? If you work until you're 65, it seems advisable to wait. However, if your health is not good, or you know you can receive the Guaranteed Income Supplement (GIS),which causes a reduction in CPP pay- ments, you may want it earlier. For complete details on the CPP, visit: servicecanada.gc.ca/ eng/isp/cpp/cpptoc.shtml. LEARN MORE Get started on your road to savings with Bridgewater Bank's Smart eSavings Account. Visit bridgewaterbank.ca for more details. WESTWORLD >> NOVEMBER 2011 49

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