{"id":184953,"date":"2025-12-15T15:01:13","date_gmt":"2025-12-15T15:01:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/184953\/"},"modified":"2025-12-15T15:01:13","modified_gmt":"2025-12-15T15:01:13","slug":"retiring-in-december-is-easier-financially-but-trickier-emotionally","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/184953\/","title":{"rendered":"Retiring in December is easier financially but trickier emotionally"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Retirees who aren’t winter sports enthusiasts may find the shorter, colder days of winter a bad time to begin their next phase.Halfpoint\/iStockPhoto \/ Getty Images<\/p>\n

More Canadians retire in December than any other month, according to Statistics Canada, a timing that offers advantages for tax planning while making the emotional side more difficult for some.<\/p>\n

Adam Chapman, certified financial planner (CFP) at YESmoney in London, Ont., says many clients will kick off a December retirement with a big trip or event. But once they\u2019re home and reality sets in, waking up in the dark and experiencing shorter, colder days can be difficult, he says, especially if they aren\u2019t winter sports people.<\/p>\n

\u201cThey typically find there\u2019s not enough momentum getting out of the gates,\u201d he says of clients trying to figure out how to spend their days.<\/p>\n

However, a December retirement makes designing a client\u2019s income stream substantially easier, says Greg Keith, CFP at Wealth Plan Atlantic Inc. in Saint John.<\/p>\n

\u201cYou have a clean slate from a tax perspective,\u201d he notes.<\/p>\n

New retirees shift from their employee paycheque structure, with all taxes withheld, to receiving income from multiple sources, including workplace and government pensions as well as investments. Starting with a new tax year allows the advisor and client time to figure out the tax consequences and timing of withdrawals from specific income streams.<\/p>\n

Compare that to retiring in the summer, when a client is introducing their pension and other income on top of the employment income they\u2019ve already earned for part of the year. Receiving Old Age Security for the first time at the end of the year, Mr. Keith says, on top of all the income received earlier in the year, could trigger a clawback of the government entitlement. <\/p>\n

Clients who retire later in the year may also find themselves paying taxes at a higher marginal rate, he says. \u201cThat\u2019s why some choose the end of the year, so they can start with a fresh tax year.\u201d<\/p>\n

December retirements also create tax planning opportunities, Mr. Chapman says. He gives the example of one spouse retiring in December while the other spouse is still working. The retiree may not require any money right away, with the couple planning to live on the working spouse\u2019s income to start. In that situation, the retiring spouse could withdraw income from their RRSP in January \u2013 a low enough amount that they\u2019re not paying taxes \u2013 and then make an RRSP contribution to reduce their final working year\u2019s income.<\/p>\n

Mr. Chapman also notes that setting up a RRIF is easier at the end of a tax year, as the minimum withdrawal amount is calculated in January. <\/p>\n

\u201cSetting up your income-producing accounts at the end of the year also gives you greater control over the withholding taxes collected the following year when you\u2019re drawing income,\u201d he adds.<\/p>\n

Year-end wrinkles<\/p>\n

That\u2019s not to say every December retirement goes smoothly. Mr. Keith gives the example of a client getting downsized. If the company insists on a lump-sum severance payout and doesn\u2019t allow the amount to be pushed into the following taxation year, that could move the client into a higher tax bracket.<\/p>\n

\u201cThere are limits to what you can do unless they do give you options,\u201d Mr. Keith says.<\/p>\n

Receiving bonuses or commissions can be another issue for a client deciding whether to retire in December or to wait a few more months, says Mutaz Dirar, financial advisor at Edward Jones in Waterdown, Ont.<\/p>\n

Depending on a company\u2019s fiscal year-end, he says, some companies pay bonuses in the first quarter of the new year.<\/p>\n

\u201cIf the person retired in December before their bonus pays out, they\u2019re not going to get that bonus,\u201d he says. \u201cIf the bonus will be significant, it\u2019s something to think about.\u201d<\/p>\n

In that situation, clients may wait to receive that money, Mr. Dirar says, noting that retiring early in the year will still provide the client with more options.<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Retirees who aren’t winter sports enthusiasts may find the shorter, colder days of…\n","protected":false},"author":2,"featured_media":184954,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[2571,138,246,15208,111,139,14485,69,244,245],"class_list":{"0":"post-184953","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-appwebview","9":"tag-business","10":"tag-finance","11":"tag-globe-advisor","12":"tag-new-zealand","13":"tag-newzealand","14":"tag-noastack","15":"tag-nz","16":"tag-personal-finance","17":"tag-personalfinance"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/184953","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=184953"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/184953\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/184954"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=184953"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=184953"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=184953"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}