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How will COVID-19 affect your retirement?
There isn’t a single person who hasn’t somehow been affected by the coronavirus, both socially and economically. The effects can be particularly dramatic if you’re retired or nearing retirement. Here are some of the implications to be thinking about.
If you’re retired…
The federal government has temporarily reduced the minimum amount that you must withdraw from a Registered Retirement Income Fund (RRIF) or Life Income Fund (LIF) in 2020 by 25%. You can opt to take the full reduction or continue full payments (you can’t arrange a partial reduction of, say 15%).
If you’ve already made 2020 RRIF withdrawals at the unreduced minimum (or have taken out more), you won’t qualify and you won’t be allowed to redeposit money back into your RRIF or LIF. If you’ve already received some of your 2020 payments, you can elect to have the remaining payments adjusted so that your 2020 total will be 25% lower.
There are a few ways that taking the reduced amount could help. It could save you money by lowering the amount of income tax payable. It could also reduce claw backs on Old Age Security (OAS) payments.
And, it could also have a positive financial impact over the longer-term, by helping you keep more of your investments intact during a time when equity markets are unstable.
Thinking about what is in your RRIF is just as important as how much is in it. If you haven’t met with your advisor recently, it might be time to schedule a review to see if your investments need adjusting.
If you’re thinking about retirement…
This is especially true if you’re thinking about retiring in the coming years or decade.
If we look back to the recession of 2008-09, it took years for some investors to recover from the negative impact on their holdings. This was an especially difficult time for those age 55 and over, many of whom were forced to delay retirement.
A carefully structured portfolio can help protect you from market downturns that could force you to delay retirement, while providing opportunities to maximize your assets during your accumulation years.
Everyone over 50 needs a portfolio review.
Whatever stage you’re at in your retirement journey, it’s more critical than ever to get advice from a trusted expert who understands the markets and can offer investment strategies for growth and protection. Turn to your FORTAX Private Wealth Advisor to help you structure a plan for a comfortable retirement.