Money & Career

5 reasons not to retire

By: Bryan Borzykowski

Author: Canadian Living

Money & Career

5 reasons not to retire

By: Bryan Borzykowski
Most Canadians can't wait to retire. When you're a young buck working hard to bring home the bacon, the idea of spending that cash on a year-long vacation sounds pretty great. But once retirement is actually on the horizon, many people start having second thoughts about walking away from work.

That's not necessarily a bad thing -- now that we live longer, the idea of sitting around for 30 years doesn't sound as good as it once did. So should you retire or not? Here are five reasons why you may want to keep pulling down a paycheque.

1. You need the money

Baby boomers have received countless warnings over the years that they haven't saved enough for retirement. Now that that age group is turning 65, they're realizing that what they were being told was true. (The recession didn't help.) Many people simply have no choice but to keep working. They either only recently started to save or need a few extra bucks to make ends meet. Ultimately, the only way you'll be able to retire is if you can afford to.

2. You like working

My father-in-law is turning 71 next month and he works harder than the majority of his colleagues. Why? Because he loves what he does. The money doesn't matter, though it's nice to pull in a decent salary at his age. He just can't imagine ever not working. And we don't want him to stop. Maybe he should work a little less, but employment keeps his mind sharp and his brain and body active.

3. You hate retirement

After working so hard for so long, having nothing to do can be difficult. Retirement often puts a strain on couples and after taking a few trips, the thought of getting on another airplane may start to make you ill. A lot of people choose to go back to work part-time and do something they love.

If you're an avid golfer, maybe work at a course picking up stray golf balls. Sure, it's not the most challenging work, but you get to be out of the house, meet people and, hopefully, your employer will give you free rounds of golf. The extra income can also help pay for those extra things you may not have thought you'd be able to afford in retirement.

4. You'll collect bigger benefits

If you work until you're 70, the government benefits you receive will be more than if you quit when you're 65. If you start collecting Canada Pension Plan (CPP) at 70, you'll get 42 per cent more than if you retired at 65. If you start receiving CPP at 60, you'll get 36 per cent less than you would if you began taking payments at 65.

5. You'll lose your RRSP later

At 71 you must start withdrawing from your Registered Retirement Income Fund (your RRSP converts into a RIFF at that age). However, people who retire early will likely convert their RRSP before they hit that magic number.

When you start withdrawing, not only are you drawing down your principal, but you're making less money in the market because you won't have as much invested. Once you convert you must withdraw a certain percentage from a RRIF every year. If you can hang on until you're 71, you'll have more money in the bank.

While retirement might sound fun, wait a few more years and it may be that much better. If you can't get a part-time job on a golf course, at least you'll have more money to spend on green fees.

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Money & Career

5 reasons not to retire