7 secrets of financially fit seniors

Over 65? It’s not too late to talk to a financial planner about optimizing your retirement income and plans.

Senior woman with a financial advisor reviewing paperwork

After a lifetime of working and saving, you may never have imagined worrying about finances in your late 60s and 70s. Yet many Canadian seniors are anxious about running out of money in retirement, assisting their family financially and paying for senior care, especially as post-pandemic inflation and interest rates rise. Fortunately, there’s still a lot that you can do to meet your financial goals, maximize investment and pension plans, reduce taxes and safeguard your retirement income. Discover good financial habits and money management tips from these seven secrets of financially fit seniors.

“It’s never too late to make a financial plan,” says Tina Tehranchian, a certified financial planner and senior wealth advisor at Assante Capital Management. “Seek out advice from a certified financial planner who understands your situation and can help you navigate the complexities of investments, taxes, pensions and government benefits.”

Secret #1: Financially stable seniors keep updating their plans and budgets

Times change, so the financial advice you received 10 years ago may no longer be applicable to your current situation or the economy. Reworking your financial plan will help you calculate how much you can spend during your lifetime, including contributions to family or charities that you want to support, says Tehranchian. 

Your updated financial plan should ideally cover:

  • Your current and future income sources;
  • Your assets (current and future value);
  • Your current and future living expenses;
  • Current and future investments; and
  • Tax planning, insurance and estate planning. 

Your needs, interests and the income you get from investments, savings and pensions can vary from year to year in retirement, which is why you’ll want to regularly adjust your budget, too. You may want to track your spending and keep costs low, but don’t forget to factor in spending for retirement travel and fun. The Financial Consumer Agency of Canada offers budget planning tips and tools in its retirement checklist to get you started.

Secret #2: Money-smart seniors plan for housing and health care costs

When it comes to financial planning for seniors, Tehranchian recommends assessing personal finance goals and assets and factoring in the potential costs of retirement living or long-term care. It’s reassuring to remember that you can likely offset these costs with the additional income you’ll have if you sell your home and properties and invest the proceeds, as outlined in our guide on how to finance senior living and our recent article, how to afford Assisted Living

Secret #3: Financially secure seniors pay less tax

Any guide to senior finance should cover taxes and tax planning. You’ll want to save money by applying for tax credits and carefully plan to minimize income tax when withdrawing from registered and non-registered savings accounts. (Happily, any income earned in or withdrawals from your Tax-Free Savings Account are tax-free.)

Get advice if you convert your RRSPs to registered retirement income funds (RRIFs), too. These allow your investments to grow while minimizing taxes but should be strategically drained as you age. “Most seniors are surprised to learn that the entire balance of their RRIF can be taxed as income on the death of the last spouse, so they could stand to lose half the RRIF to taxes,” says Tehranchian. “Fortunately, this can be avoided with proper financial planning.”

Secret #4: Well-off seniors are typically pension savvy.

If you can afford it, delaying the start of your Old Age Security (OAS) and Canada Pension Plan (CPP) payments until you’re 70 and your income is lower can save you money. (Find out more about public pensions.) You may be able to share a portion of your CPP benefits and eligible income from a registered pension plan with a lower-income spouse, as well.

Secret #5: Smart seniors continue to invest wisely.

In the later years of your life, you need to carefully consider the quality, balance and diversity of your investments, with consideration to issues such as OAS clawbacks, inflation and taxation. Tehranchian notes that some seniors stop investing altogether because they’re worried about clawbacks to their Old Age Security, but these can be minimized so you still make money. 

Talk to your planner about how to earn returns despite inflation, too. “Many conservative seniors opt to invest in GICs only, for example,” says Tehranchian. “But if you’re earning 2% return on a GIC and the inflation rate is 5%, your real return after taking inflation into account is actually negative.” 

Likewise, a financial planner can help you balance and decumulate your investments to minimize capital gains and income tax.

Secret #6: Prudent seniors consider the future.

Sensible older Canadians prepare a will and appoint a financial Power of Attorney. This allows someone or several people you trust to manage your money for you if you’re physically or mentally unable to do so. Seniors also consider different types of life insurance to financially assist their spouse or family and to cover any debts, charitable gifts or funeral expenses after they die. Some options include single or joint term life insurance or permanent insurance, such as whole life or universal insurance.

Secret #7: Clever seniors invest in their well-being

It’s normal to want to help your family financially — whether as a gift now or in an inheritance later — but don’t feel guilty about capping the amount so that you have funds to live a full and healthy life in the meantime. Read Your retirement money: spend it or save for inheritance? before you start estate planning. It will help you determine what you want to set aside for your children and what you want to save for your lifestyle and senior care, with a focus on a harmonious family relationships unfettered by conflict or caregiver burn out.

A good financial plan should help you balance those needs and eliminate anxiety about running out of money in retirement, says Tehranchian. “It can lead to more peace of mind and more enjoyment of life and savings that seniors have accumulated over a lifetime.”

At the end of the day, life is for living. The best financial advice for seniors should focus not just on optimizing income, investments and giving but also on savouring a vibrant, healthy and connected life with freedom, purpose and optimism. 

Book a virtual or in-person tour to find out what it’s like to enjoy living on your own terms in an elegant Amica residence with outstanding dining, amenities, activities, senior care and safety measures.