It might sound surprising, but retirement planning can begin even before you hit 30! The earlier you start, the more time your investments have to grow and compound!
As you get closer to retirement, ask yourself:
- What do I want my retirement to look like?
- What do I want to accomplish in my retirement?
- How much money do I need to save to fulfill all my needs?
Here are some tips to help you save for your retirement:
- Assess your income sources
Identify all sources of income that can be used during your retirement.
Government Pension: Understand what government benefits you’ll receive during retirement. In Canada we have the Canada Pension Plan (CPP), and Old Age Security (OAS).
Workplace Pension: If you have a workplace pension, factor it into your retirement income.
RRSP (Registered Retirement Savings Plan): Contribute consistently to your RRSP. It offers tax advantages and helps build your retirement cushion.
TFSA (Tax-Free Savings Account): Maximize your TFSA contributions. It is a flexible way to save without paying taxes on investment gains.
Savings Accounts: Don’t overlook traditional savings accounts. They provide liquidity and stability.
It's helpful to speak with an advisor to create a financial plan that works for your needs and ensures your utilizing all of your income source options!
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- Account for Inflation and Unexpected Expenses.
Inflation rises about 2% each year, impacting your purchasing power. Plan ahead by building a retirement fund that accounts for future inflation increases. Prepare for unexpected costs, such as medical bills or emergencies, by creating an emergency fund.
- Reallocate Your Investment Portfolio.
As retirement approaches, you may want to adjust your investment's risk to a less risky portfolio.
Speak with a financial advisor about switching your investments less risky assets, such as government bonds, GICs (Guaranteed Investment Certificates), and other fixed income investments.
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- Continue Saving in Your 60s.
You can continue to contribute money into your TFSA forever! Also, you can contribute to your RRSP until the age of 71. So, keep that in mind when you reach your 60s, because in 10 years your money can still grow a significant amount.
By referring to these strategies you can set yourself up for a successful retirement!
If you’re interested in learning more, or if you have any questions, give our Contact Centre a call at 1.866.863.6237.