Why Should I Think About Retirement Planning?

If you’ve only just begun your career and are starting to collect a decent paycheck, the last thing on your mind is probably retirement planning. When you’re in your twenties and thirties, retirement can feel light years away, but it will get here much quicker than you can imagine. And when it does, you’ll want to be prepared.

And for those in their 40s and 50s, remember that it’s never too late to start saving for retirement. The most important thing is to just start.

Here are some tips for getting started:

1. Work on creating a retirement budget. This is much more helpful than simply guessing. Take a look at your spending habits over the past six months including necessities such as rent or mortgage expenses, food, utilities and automobile expenses. Your retirement plan should resemble your current budget, with adjustments for cost of living or inflation included. Of course, things will likely change as you get closer to retirement age, but if you have a solid retirement budget in place and update it regularly, it can go a long way towards helping you meet your savings goals.
2. Jot down the various income sources that you expect to receive when you retire. This can be anything from the RRSP that you’re contributing to at work, to monthly CPP payments, to any other investments you may have, such as mutual funds, stocks, or savings accounts. By comparing your average expenses with your expected income, you’ll be able to get a better idea of how much you need to save prior to retiring.
3. Pay off your debts. If you still have a significant number of debts that you’re paying on, concentrate on paying them off prior to retirement. This will significantly increase the amount of available cash you have each month.
4. Stay on top of your retirement savings. Checking in monthly is important; allowing you to review market changes and see performance details. It can also help you analyze under-performers and perhaps even give you reason to invest in other areas to increase return, or minimize losses. But you’ll never know if you don’t keep abreast of the accounts.
5. Factor in where you live when determining your retirement costs. There are many locations that are much more retiree-friendly than others, and if you live in a more expensive location, you may want to consider relocating to an area where your money will go further.

When you make the decision to retire, you’ll want to be able to enjoy your life. Planning for retirement will go a long way towards helping you achieve that goal. If you want help building out what your ideal retirement plan looks like, please contact us! We can build out a customized and detailed plan which includes all your various income sources in a highly tax efficient manner, so you can spend more time worrying about other priorities.