Planning for your retirement

It’s time to take action.

Everyone knows they should plan for retirement and save accordingly. To help put you on the right track, here are some key points to consider as you develop and refine your retirement plan.

Time horizon. As you get older, it becomes more important to have a solid retirement plan in place – one that you have been funding for years. If you are younger, retirement may still seem far away. But now is the time to take advantage of the benefits of compound growth through a regular savings vehicle like a Registered Retirement Savings Plan (RRSP) or Tax-Free Savings Account (TFSA). Even if you are putting away a small amount each month, over time you can grow your savings dramatically.

Income needs in retirement. Your lifestyle will change once you retire – that’s a given. How it changes is up to you. Do you plan to travel more? Pursue hobbies? Take courses? Change residences? Help family members financially or donate to your favourite charity? Whatever you choose, you need to determine how much money you will need. Be realistic and be aware that your needs may change depending on your health (and the health of your loved ones), where you live, plus many other factors. Try your best to estimate monthly income requirements, keeping in mind the effects of inflation.

Sources of income. The flipside of estimating income needs is estimating how much income you will generate in retirement. Will you work full time, part time, contract or not at all? Do you have RRSPs that will be converted into Registered Retirement Income Funds (RRIFs) or annuities? What about TFSAs and other savings accounts or investments? Any rental income or other regular cash flows? How about company pensions, government pensions or income from other social benefit programs? Think about all the sources of income you may have in retirement.

Your financial advisor can help. Retirement planning can be complicated, but you don’t have to do it alone. In fact, you shouldn’t. A financial advisor has the knowledge, experience and network of related professionals to help you map out the best route to a rewarding, happy retirement. An advisor will assess your current financial situation, forecast what your retirement needs may be (based on your input) and then identify potential income gaps. More importantly, your advisor will implement a plan to help close those gaps so you can enjoy your retirement.