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BMO Bank of Montreal

BMO Bank of Montreal

February 16, 2012 08:00 ET

BMO Retirement Tips of the Day: Do Your Homework Before Starting a Business in Retirement & Avoid Spending Too Much, Too Early in Retirement

TORONTO, ONTARIO--(Marketwire - Feb. 16, 2012) - As the February 29th deadline approaches to make a contribution to a Registered Retirement Savings Plan (RRSP) and as part of its ongoing commitment to improving financial literacy, BMO Financial Group will be providing daily retirement tips during the month of February from BMO Retirement Institute Head Tina Di Vito's new book 52 Ways To Wreck Your Retirement…And How To Rescue It.

Tip Number 31:

Do Your Homework Before Starting a Business in Retirement

Canadians aged 55+ lead the country when it comes to starting new businesses. While Canada's boomers may have an entrepreneurial streak, there are some big risks they need to consider before starting a new business during retirement. These include:

  • Do you have the necessary skills or licenses to run the business? How long would it take to be qualified or get certified? Would you hire staff?
  • What initial funding is required for the start-up?
  • How will the business be structured (sole proprietor, partnership or incorporated)?
  • Is there a demand for your product or service?
  • Who are your competitors?
  • What are the location and time commitments?

Tip Number 32:

Avoid Spending Too Much Too Early in Retirement

Despite the excitement you might feel upon retirement, dipping into your nest egg too quickly can increase the chance that you will run out of money before you run out of time. Keep in mind that the different phases of retirement require different levels of planning, so plan your savings accordingly.

  • Early Phase: You are ready to do the things you've been putting off and are generally the healthiest in these years.
  • Middle Phase: This is usually the longest phase. You are realistic about how much time and money certain activities consume and have developed a routine.
  • Late Phase: Also known as the "slow years", your health or the loss of a partner prompts you to slow down and you will be spending money on home care or other services that did not need funding in the past.

For more information on retirement: www.bmo.com/retirement.

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