Tips for Retirement Planning
Wednesday, August 21, 2013
Most current retirees may wonder if they had to do it all over again they might do it differently. The vast majority of young Canadians admit having a limited knowledge about tax and retirement methods and some are expressing they wished they knew more.
At any age, it is always a good idea to start thinking about retirement. Having a plan may help in achieving goals throughout a working career, and help to plan ahead. Below are some basic tips for retirement planning:
- Be careful of how you spend your money! (at any age). Make sure that you are spending what you need to, and saving what you need to, so in fact someday you won’t have to work, and will be comfortable in retirement. Buying the best of everything might leave you strapped for cash later in life. The money that you’re spending today is money that you’re borrowing from your retired self.
- Make it a priority not to carry debt into your retirement. Almost 40% of Canadians find out too late why this is important. Choosing a more moderate home and a shorter term mortgage might help in keeping you so you don’t have to carry mortgage debt into retirement age. Try to pay off all debt including your mortgage before heading into retirement.
- Make sure that you look after your health pre-retirement. The habits that you have before retirement will carry on with you into retirement, so make sure that you enter into retirement has healthy as you can.
- Make sure that you have a goal during your retirement. What will you do each and every day? How will you motivate yourself? What will you do with all this new found spare time? Make sure that you have something to do. It might feel great for the first few months, but many might find their time long if they don’t have a plan.
- Work with a financial advisor to figure out how much money you will need to retire. Work towards those goals throughout your working career.
- Start saving for your retirement as early as possible. The younger you start, the less money you have to put aside.
- Make use of company pension plans, especially if your employer offers contributions that match yours. It is money that you obtain but do not have to pay in yourself.
- Open a Tax-Free Savings Account (TFSA) and contribute as much as you can. You can accumulate a savings without having to pay interest on that savings.
- Open a Registered Retirement Savings Plan (RRSP) and contribute as much as possible. You get a tax rebate when you pay into it throughout your working career and the money will be there for when you retire.
- Take out life insurance when you are young and healthy. This might help your family in the event of a loss.
Most Canadians are anxious about retirement simply because they do not start planning for it early enough. Both your retirement and the years running up to it will be a lot more pleasant when you do.