The benefits of sensible retirement planning are clear; the creation and implementation of a personal retirement strategy might not feel so straightforward.
Don’t stress. Even with the number of variables to consider, it isn’t as difficult to create an effective plan for retirement as most think.
Let’s begin by considering the merits of a retirement plan:
- Having a plan, most importantly, will help to give you peace of mind, reducing stress during retirement as well as the years leading up to it. In contrast, a lack of planning can leave you with a looming cloud of uncertainty.
- The plan will help you in setting clear goals for your retirement. This could include things like the age that you want to finish work and what lifestyle you want to live in your retirement.
- Taking the time to plan for your retirement early on will allow you to make more efficient career-related and general financial decisions prior to retirement.
- A retirement plan will help you to establish how much you need to save to have the retirement that you want.
- There are several tax benefits of retirement planning, including reducing the amount of income taxes you will pay during retirement and ensuring that beneficiaries are not only in place, but will pay as little tax as possible.
How much you need to save depends on three factors:
- Your age. Starting to save for retirement when you are younger means that you need to save less money over a longer period.
- The benefits available. There are a range of federal government benefits that you might be eligible for, such as the Canada Pension Plan or Old Age Security.
- Your desired lifestyle. Your personal plans for retirement will inevitably affect how much you need to save to properly fund it.
If you haven’t started saving for your retirement yet or have less in your retirement savings plan than you would like, here are some tips to help you get started:
- Make the most of RRSPs and TFSAs to minimize your tax bill and make your money grow faster.
- Take advantage of any pensions or savings plans that your workplace offers as the contributions that your employer makes can add extra value to your fund.
- Think about putting spare money into your retirement fund.
- Closely look at your spending habits to identify opportunities to cut unnecessary expenses and save more.
Taking steps to create an effective retirement plan is a decision that will certainly pay off. It will give you the opportunity to have the savings for the retirement that you deserve.
Looking to plan? Talk to us, we can help.