Making sure you have enough money for retirement begins while you’re still employed. Making a plan will help you feel secure about living comfortably in retirement when the time comes, as you probably don’t want to stay working forever.
The timing of retirement planning and savings is completely up to you because these financial goals and plans are very personal and frequently linked to your family life, goals, and values. Unfortunately, a large number of Canadian households do not feel in control of their finances. Thirteen percent of households have “forfeited contributions to their retirement accounts,” a choice that will affect them later in life, according to a World Financial Group survey.
Use these retirement planning strategies to make sure you’re ready.
Understand when you can retire and how much money you will need
There is no one-size-fits-all method for determining when and how much money you’ll need to quit working because almost everyone has distinct retirement goals. Examine your particular circumstances, taking into account all of your sources of income, assets, and savings, and determine how much you’ll need to support your quality of living and pay for retirement-related expenses, including any discretionary spending.
Choose an appropriate retirement plan for your needs
Aside from determining the appropriate amount to save, another crucial factor is choosing the appropriate savings vehicle. Starting with an employer-sponsored retirement plan that matches your RRSP contributions is a smart move. If there isn’t an employment retirement plan, think about saving for retirement with a variety of options stored in your TFSA or RRSP. Benefits like life insurance (and tax breaks in retirement) may also be offered by certain insurance plans.
Take stock of your current assets
You have more assets than just the money in your bank account right now. In addition to your paycheck, consider real estate, investment accounts, and any existing insurance policies. If you need assistance understanding your finances, consider visiting with a financial services expert after taking a financial literacy exam to gauge your level of understanding.
Create a retirement budget and look for ways to reduce expenses
The budget you have for retirement ought to match the one you had while you were employed. Determine how much money is coming in and going out for fixed expenses like utilities, phone bills, insurance premiums, rent or a mortgage, and car payments. Next, keep track of other expenses like groceries, gas, and other expenditures for non-essentials like clothes and entertainment. Next, find strategies to reduce spending to make your money go farther, such not going to a new movie release, cutting back on eating out, or canceling a streaming service.
Account for unexpected expenses
Prior to retiring, think about how you would manage unforeseen costs like a car or home maintenance, a medical emergency, or relocating to an assisted care facility. What if your homeowner’s and health insurance coverage is insufficient? If so, you might have to pay for those expenses out of pocket, which could reduce or make it more difficult for you to be flexible with your finances when you have a fixed income.
Learn more about retirement planning at: https://newscanada.com/en/Top-tips-for-retirement-planning-139787
Reference: https://newscanada.com/
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