There are no easy answers when it comes to planning for retirement. Everyone is different, and will have unique needs and plans for their retirement. It’s never to late to start developing a solid strategy for your retirement.
Age
When you start to plan and at what age you plan to retire varies. These ages will depend on what your goals are and how much you’ll need to live the life you want after you are finished working.
Inflation
How much does it cost for you to live? This will change based on inflation rates. Remember, your monthly expenses will be quite different today than what they’ll be 10 years down the road. Some will be more and some will be less.
Interest
From the interest you are gaining in your savings account and investments to how much intereste you’re paying on your mortgage, it all affects your bottom line and timeline for retirement.
Income
For your retirement, figure out how much money you’ll need every year. Ideally experts say that you should have approximately 70% of what your peak salary was while working.
Pension
Many people supplement their retirement with their pension. You can get more details on what you can expect here.
Investments
Investing in things like GICs, RRSPs, RRIFs and TFSAs can never start to early. There are a lot of options to consider when investing your money, so doing your homework is essential.
If you want to get a more solid understanding of just how much you’ll need, check out this Retirement Calculator.
Speaking to an advisor at your financial institution is always a good idea. They’ll take the time to consider your situation, and help you create a plan that’s based on your particular circumstances, goals, etc.
Here are some things you may want to consider asking before you meet with a financial advisor or personal banking representative. Beyond the basic living expenses for retirement, you may be in a position after your working years to do more things than you currently do now. If you’re young and not thinking about retirement, it’s easy to live paycheck to paycheck and not consider the future.
Here are some important factors when building your vision of retirement:
- Create a vision of your retirement (some suggestions below)
- A savings discipline is crucial
- Put your plan in writing
- Planning to work in retirement is NOT a retirement plan
- Don’t assume your living expenses will be significantly lower in retirement
- Your home in NOT a retirement savings account
Make a list of all the things you’d like to do once you have more time:
- What new contributions can you make?
- What passions can you develop?
- Where would you like to volunteer?
- What new things would you like to learn about?
- What new places would you like to see?
- Where would you like to live?
- Where do you spend your free time now?
- Where do you spend your extra money?
- What are your strengths that might be fun to develop?
- What weaknesses would you like to overcome
- What experiences would you like to have?
