You are more experienced now, your bank account is larger, and it is easier to think further ahead.
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For the vast majority of Canadians, retirement is the major financial goal in their lives. That requires considerable financial obligation and planning. Half of Canadians expect to retire by the time they turn sixty.* this may be a lofty goal for some, especially if you haven't started a retirement savings plan, but we are here to tell you that it is never too late to begin saving.
Retirement planning requires you to set aside enough money during your working years so that you may have enough income during your retirement years. It's a simple enough idea, but it can get very complicated to accomplish when you begin exploring your investment options and the corresponding tax consequences that go with those options. That's why we feel these seven steps are critical to your retirement planning success:
Retirement Planning is a principal financial goal for Canadians. It doesn't matter if you already have a savings program in place, or are considering starting one now, the first step is to figure out just how much will be available to you when you retire.
While it may seem impossible to guess exactly how much you might need for retirement in 30 or 40 years from now, it's imperative to start saving for it today. By setting up a RRSP/TFSA while you're young, you put time on your side which allows you to watch your savings grow tax-deferred/tax-free over the long term.
Contact our office for THOROUGH BREAKDOWN of your retirement income needs and prospects.
Save now, Start now and Stay invested. These are the 3 S's. Start now by investing what you can, and when you feel comfortable, try to increase this amount every few months. Save Now by using a pre-authorized deposit plan that helps you to make regular contributions to your retirement savings plan.
Remember, small amounts can accumulate significantly over time. No matter when you start investing, the key is to stay invested as long as you can. The longer you Stay invested in your investments, the more they will benefit from compound growth.
Diversification is the same as saying do not put all your eggs in one basket, financially speaking. You spread your risk by investing in numerous different investments, which has the effect of reducing the impact of one poor performer in your retirement savings portfolio.
Experts agree that the asset mix of your investments - safety, income and growth, should represent more than 80% of your portfolio's return.
We all try to prepare for our retirement at different stages in our lives. The most effective strategy is to begin in your 20s or 30s with the purchase of your first Registered Retirement Savings Plan (RRSP) or by setting up a Tax-Free Savings Account (TFSA).
It doesn't require a whole lot of money to start a nest egg if you begin saving early enough and let time work for you. Make your first deposit as early as possible in your working career to take advantage of compound interest.
Taking the "slow and steady" approach to retirement planning and building your RRSP/TFSA savings, setting aside small amounts habitually, is the best way to ensure your success. While it may seem like a burden at first, once you get used to it, you won't even miss the money in your daily expenses.
Alternatively, you could try freeing up a large sum of money at year-end, but this is often difficult even for the most frugal person, and is the most common reason people fail to maximize their contribution, or sometimes even make their annual RRSP/TFSA contribution.
Make a point to provide the maximum RRSP/TFSA contribution as part of your retirement planning as soon as possible in the year. This will earn you more in the long run. Also make sure to figure out if an RRSP, TFSA or both are best to help build up that nest-egg.
While it can seem like a "second savings account" in times of financial crisis, don't tap into your RRSP/TFSA unless you absolutely have to (unless of course it is part your planned strategy). Any money you withdraw today will not be there when you need really need it - at retirement.
In summary, remember that a sound retirement planning strategy will carry you right through retirement. You will be confident in the knowledge that your finances will last you for your lifetime, and maybe even a little longer. Regardless of your age, the key to a fiscally secure retirement is to start saving now!
Contact our Orleans Ontario office if you have any questions about Retirement Planning.
* Statistics Canada, Summer 2014 Perspectives and Labour Force Survey.
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