The first question anyone asks when planning for retirement is: What do you want to do when you retire? It may be a long ways away (and really hard to answer) or it might be a few short years, but it’s important to think about life after you stop earning a regular paycheque.
Whether you want to travel, learn a new skill, pick up some old hobbies, or simply maintain your current lifestyle, you’ll need to rely on savings to cover the costs of these, in addition to your everyday expenses. Doing the work now and learning how much you need to save will allow you to live your dreams out in retirements, instead of letting the available fund control your dreams. Here are a few things you can do now and down the road to boost your savings:
Savings for today
Cut spending – Most Advisors will tell you to put away at least 10% of your earnings for retirement and emergencies. It seems like a lot at first, but there are easy ways to trim down your spending. Start small, even if you can only afford $50 a paycheque, spending less now means more for your retirement.
Maximize investments – Take advantage of all the tax-sheltered investment options, like RRSPs, RESPs, and TFSAs. Using as much of the contribution room as possible each year will help reduce taxes.
Pay off debt – Eliminating debt prior to retiring will significantly decrease the stress on your reduced income – plus it leaves more room for the fun activities’ retirement offers. So, start paying off those credit cards, mortgages, and loans as soon as possible.
Savings for tomorrow
Work longer and ease into retirement – Retirement looks different for everyone and doesn’t always mean you have to stop working entirely. Reducing your hours or getting a part time job is a great way to ease into that transition while maintaining a steady cash flow. Try our retirement calculator to see what your income will be with government pensions and other programs. Then when the time comes, you can choose different retirement income options like RRIFs or annuities.
Prepare for the unexpected – We always think emergency funds are more for home expenses, but as we get older healthcare costs increase. It’s important that your retirement plan includes funds to cover those personal healthcare needs like medications or assisted living expenses.
Consider downsizing – Sure that 4 bedroom 2 bathroom house was perfect when you had the whole family at home but now that everyone’s left the nest, it’s time to considering reducing your larger expenses. Opting for a smaller home will allow you to invest more for later.
Our expert Advisors can help ensure you do the right things now so you can live out your retirement dreams later.
