Year-End Financial Tips: Preparing for the New Year in Retirement
As the year draws to a close, it’s the perfect time to pause, reflect, and ensure your finances are on track for the year ahead. For retirees, year-end financial planning can help minimize taxes, stretch your retirement income further, and position you for continued financial security and peace of mind.
Below are key tips to help you close out the year with confidence and start the new year on solid financial footing:
1. Maximize Your RRSP and TFSA Contributions
Before December 31st, review your contribution limits for your RRSP (Registered Retirement Savings Plan) and TFSA (Tax-Free Savings Account). RRSP contributions lower your taxable income, while TFSA contributions let your investments grow tax-free — both are powerful tools for retirees.
Pro Tip: If you have unused RRSP room, consider making a lump sum contribution before the deadline. This can create a valuable tax deduction for the year.
2. Consider Tax-Loss Harvesting
If you hold investments in a taxable account, now is an excellent time to look for underperforming investments that could be sold to offset capital gains — a strategy called “tax-loss harvesting.” Done right, this can lower your taxable income and free up cash for reinvestment.
Pro Tip: Work with a tax professional to ensure tax-loss harvesting supports your long-term investment goals.
3. Review Your Retirement Income Strategy
How you draw income from your RRSP, RRIF, or other retirement accounts affects your taxes and long-term sustainability. Year-end is the perfect time to check whether your withdrawal strategy still aligns with your spending, lifestyle, and future needs.
Pro Tip: Review your withdrawal strategy with a financial planner to ensure it minimizes taxes and preserves your savings over time.
4. Evaluate and Update Your Estate Plan
Life changes — so should your estate plan. Review your will, power of attorney, and beneficiary designations to make sure they reflect your current wishes. This is especially important if you’ve had significant life changes like new grandchildren, a marriage, or the passing of a loved one.
Pro Tip: If you haven’t created an estate plan yet, the end of the year is an ideal time to start. A qualified estate planner can help ensure your assets are protected and distributed according to your wishes.
Conclusion
Year-end financial planning is more than a checklist — it’s an opportunity to take control of your retirement journey and enter the new year with clarity and confidence. By maximizing your RRSP and TFSA contributions, reviewing your investments, optimizing your withdrawal strategy, and updating your estate plan, you’ll set yourself up for a financially strong and stress-free year ahead.
Take action now to enjoy the peace of mind that comes with knowing your retirement plan is working for you.