Whether you plan to flock to warmer climes, spend your days golfing, or pursue your dreams, the journey to retirement is just as important as the destination.
Numerous financial responsibilities can keep Canadians from feeling prepared for retirement, especially those just starting out in their careers. The reality is that it’s never too early—or too late—to start thinking about your golden years.
Planning for your retirement can seem overwhelming, but with a few well-considered steps, you can turn those years into whatever you want them to be.
Set up a meeting with a financial advisor
Finding the right path to retirement savings can be tricky, especially for those unsure of how to get started. Don’t be afraid to ask for help! Jeff Olensky, a Wealth Management Specialist at Prospera Credit Union, suggests thinking of your savings plan like a vacation.
“If you go on a vacation, how do you get there? You need a plan, and you don’t need to create that plan alone. Let a planner help you—we’ll do the heavy lifting,” says Olensky.
A financial planner can help you assess your own situation and figure out a retirement plan that works for you. For example, Prospera has Certified Financial Planners that you can meet with in person. No matter what stage in life you’re at, an advisor will help you establish your goals, keep you on track, and adapt the plan along the way as life changes.
Make a long-term savings plan
Be realistic about your savings. There’s no sense in overextending yourself if you’re struggling to make rent or mortgage payments—so if you find yourself in a tough financial situation, cut back on how much you’re putting aside. Ideally, you should be putting away at least 10 per cent of your income every month; but this amount should increase as your career prospects (and financial wellness) grow.
If you’ve been given a raise at work or have landed a higher paying job, increase your monthly amount accordingly. It’s important to keep your financial plan flexible and realistic for your individual situation—after all, saving for retirement is not a one-size-fits-all task.
Additionally, while many Canadians benefit from a pension plan, others don’t receive these kinds of benefits from their workplaces. Regardless of whether you have a pension in place, it’s worth considering your RRSP options. The longer you’re able to let compound interest work in your favour, the more you’ll benefit later.
Cut back on spending
Think about which things you consider necessities, and which are extras. It’s not about depriving yourself of life’s pleasures, but rather taking stock of your spending habits and determining where you can make responsible and beneficial changes. Look for inexpensive (or free) entertainment options, like community, library, and other public events. Be sure to pack a lunch for work to avoid any unnecessary dining expenses and consider purchasing only no-name brands when grocery shopping.
Another easy way to cut back your spending is to ensure that the money you put into your savings, rent or mortgage, and debt is done so automatically. If that extra money isn’t left sitting in your account, you’re less likely to spend it.
Invest your money wisely
With a solid investment plan, anyone can take steps towards their future. Whether you’re a seasoned investor or just starting out, there are plenty of options available to you. Mutual funds, term deposits, registered plans, and online investments are just some of the ways that you can make your money work for you. Mutual funds are a great choice for those saving for retirement, as they’re diverse, accessible, and low-risk.
Remember that as with any vacation, there are maps and other tools out there to help you where you want to go. As Olensky says, “it’s not just about numbers and statistics — it’s about you.” Everyone is going to have different needs when it comes to retirement planning. With a bit of expert advice and thoughtful planning, the world will be your oyster come retirement.