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What you are able to do in retirement can be limited by your income. Retirement usually means a drop in income, so you may find that you need to be more aware of your expenses in order to keep your finances under control. Drawing up a budget lets you keep track of your expenditures, and can also highlight areas where you can cut back or make savings. Remember to regularly check that you are receiving all the benefits you are entitled to. Taking advantage of the many discounts and concessions available to retirees can also help make your money go further. Are you getting the most from your pension fund? If you have a Defined Benefit pension plan with your employer the main decision you will have to make is what to do with any lump sum benefit you may receive. If, on the other hand, you have contributed to a Defined Contribution or money purchase plan, one of the key decisions that you will have to make when you retire is how best to withdraw the money built up in your pension fund.(Pension plan money is subject to provincial pension legislation.) You may be able to withdraw some or all of the proceeds as a lump sum, which is fully taxable. Or you can choose to convert your pension assets to an annuity or a Registered Retirement Income Fund (RRIF). An annuity provides a guaranteed income for the rest of your life. How much you receive depends on the type of annuity you choose, as well as the rates in effect on the date you decide to buy. As an alternative to buying an annuity, you may opt for a RRIF, which provides for periodic income, while continuing to tax-shelter the remaining capital. You can continue to invest your RRIF assets in different types of investment vehicles. The decisions you make about how to disburse your pension funds will affect your standard of living for the rest of your life. Speak to a financial advisor before making any major financial decisions. * * *
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