Your 60s can be a golden age where you experience a newfound freedom — whether it’s travelling across Canada in an RV, becoming a snowbird and chasing an endless summer, or learning how to play that dusty guitar sitting in your closet. 

Enjoying your retirement is what your 60s should be about. And to do that, you don’t want to be stressing about money. 

Your retirement planning, healthcare costs, and inflation are all things you should consider now so you can spend your time doing what you like later. This blog will take you through those considerations, as well as investments, best using your income streams, and tax implications. 

Sabrina Pizzolato, a Vancity and Aviso Wealth advisor, kindly sat down with us to give her professional advice on the money mistakes people in their 60s can avoid in order to have a financially comfortable retirement.

Skipping retirement planning.

One of the most common and significant mistakes people in their 60s make is failing to create a retirement plan. It’s easy to assume you’ll figure things out as you go, but that can lead to financial difficulties down the road.

Sabrina Pizzolato says, “I’ve seen folks enter their 60s without having sat down and considered what retirement will look like for them. If they were to sit down with somebody qualified to walk them through that process, they would identify opportunities that would make their retirement phase a bit smoother financially.”

Without a clear plan, you may not identify how to maximize your income sources or manage your spending effectively. By planning ahead, you can avoid being caught off guard by unexpected expenses and can take advantage of strategies that allow your money to last throughout retirement.

Not knowing how to use your income streams to your best advantage.

More and more Canadians are planning for retirement income streams. In fact, in 2022, 6.7 million retirement-aged Canadians reported being members of a Registered Pension Plan. This is an all-time high since 1974.

Many Canadians will have multiple retirement income streams —  like your private pensions from your career, investment portfolios, or even rental income. But that doesn’t mean we know how to make the most of them. 

“It’s important to understand what your retirement income sources will be so that you can develop strategies to ensure that you are making the most of your income from a longevity and income tax perspective.  It might make sense, for example, to start receiving some of your income sources while delaying others,” says Sabrina. 

Be sure to review your income sources, including CPP, Old Age Security (OAS), private pensions, and investment income. Speak with an advisor to understand which income sources to tap into first, and which might be better delayed ensuring tax efficiency and longevity.

Mismanaging your investments.

One of the biggest myths about retirement is that you must move all your investments into conservative, low-risk options. While reducing risk is often prudent, some level of risk can still be beneficial, depending on your financial situation.

“I think there’s a misconception that when you retire, you should become ultra-conservative from an investment perspective,” says Sabrina. “But everyone’s financial situation is unique, and there may be very legitimate reasons (i.e., tax treatment, growth, etc.) why someone might consider diversifying their portfolio to include investments that have an inherent level of risk.”

Balancing risk is highly personal and depends on your unique circumstances. Work with an advisor to determine the right mix for your portfolio, taking into account your need for growth, income, and security.

Ignoring inflation in retirement plans.

Inflation is a silent killer of retirement savings. As we’ve seen in recent years, prices for everyday goods and services can rise unexpectedly, leaving those with fixed incomes vulnerable.

71% of Canadians reported challenges with saving for retirement due to inflationary pressures. 
“People are now more aware of inflation, especially after the last couple of years. It’s important to consider inflation when building your financial plans — what you need to live on today won’t be the same in 5 or 10 years,” says Sabrina. 

As you plan for retirement, be sure your financial projections account for inflation, ensuring your purchasing power doesn’t erode over time.

Delaying estate and legacy planning.

Estate planning is often left until it’s too late. In your 60s, you have the opportunity to make sure your wishes are reflected in legal documents like your will, power of attorney, and representation agreements.
“Your will is important, but equally important are what we often call the ‘living documents’ — the enduring power of attorney and the representation agreement — because they reflect your wishes when it comes to financial, legal, and personal health matters while you are still alive,” advises Sabrina. 

Review and update your estate documents regularly. Legacy planning also opens doors to meaningful conversations about charitable giving and how you’d like your assets to benefit causes important to you, which can also provide tax benefits during your lifetime.

Neglecting healthcare costs.

One of the many wonderful things about Canada is our free healthcare system. On average, 71% of healthcare costs are covered.

Unfortunately, the closer you get to retirement age, the more your out-of-pocket healthcare expenses typically rise. Think about expenses that were previously covered by your employee health insurance or things you haven’t needed yet, like: 

• medications,
• practitioner services such as massage therapy, chiropractic, or physiotherapy 
• routine dental work, 
• vision care, and 
• medical equipment like wheelchairs and canes. 

You don’t want this to put a dent in your retirement savings dedicated to golfing, travelling, or any other extracurriculars your heart desires. 

You’re also going to want to consider later-in-life medical costs, like the potential need for long-term care. Much later in life, you don’t want to worry about being able to afford a retirement living home or a care aid. And hey, if you get to ninety and you can still do a cartwheel, you can spend that money on something else, like a motorcycle or vaulting lessons. 

“In the later stages of retirement, healthcare costs can rise significantly,” says Sabrina. “It’s important to prepare for that, whether through insurance or by setting aside funds.”

If insurance is an option, explore it before retirement to lock in better rates. Otherwise, plan for potential healthcare costs by earmarking a portion of your savings.

Overlooking tax implications.

Understanding how your income impacts your taxes is essential to ensure you get the most out of your retirement benefits. For example, OAS is an income-tested pension, which means earning above a certain threshold could reduce your OAS payments.

“Sometimes folks aren’t aware of how their income can affect their benefits. If your income surpasses a certain limit, for example, your OAS will be clawed back,” says Sabrina.

Working with a financial advisor can help you structure your income and withdrawals in a way that minimizes your tax burden and maximizes your benefits.

Having a financial security in your retirement is easier with help.

You don’t have to plan out your entire retirement yourself; a trusted advisor can help.

Vancity and Aviso Wealth advisors like Sabrina Pizzolato help Vancity members in their 60s stay financially healthy, ensuring they can afford the lifestyle they want throughout their entire lives. Connect with Vancity to explore solutions for your unique needs.

Mutual funds and other securities are offered through Aviso Wealth, a division of Aviso Financial Inc. The information contained in this article is from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This material is not intended to be investment, tax or other advice and should not be relied on without seeking the guidance of a professional to ensure your circumstances are properly considered.  Please see our Terms of Use.