Retirement planning is a constantly evolving process that ought to begin the moment you take on your first job. Just to be clear, we’re not saying that you should start to plan when you’re a teenager and doing odd jobs like babysitting, mowing lawns and so on. But we do advise that once you begin a career that requires you to pay income taxes as a full-time or part-time employee, you may want to start thinking about that day way in the future, when you decide you’ve had enough and want to retire, or it’s obligatory.
Long-term Planning Pays Off
Like most things in life, when it comes to your retirement plan, there’s always room for improvement. Thinking about retirement well in advance tends to pay off in ways you may not have been able to imagine when you were in your twenties or thirties. And doing some additional retirement planning right now can also pay off—even if you’re at an age or stage in life where retirement is imminent.
Knowing this, we’d like to give you a hand. We’ve compiled a list of things you can do pre-retirement or even if you’ve already retired. You may be familiar with many of the items on the list, however, now’s the time to nail them down, leaving you in no doubt that you’re on your way to planning a better retirement.
Conduct A Financial Inventory
There’s an old saying you may know: “The camera doesn’t lie.” And funnily enough, given the popularity of taking the odd selfie of ourselves, maybe we should apply the same principle and take a financial selfie of our retirement plan too. The resulting snapshot will more than likely show you a pretty good picture of a) where you’re headed in regard to your retirement, or b) how you’re doing now if you’re already retired.
Once you do take this financial selfie, ask yourself what it is you like and don’t like about your financial picture and make a list of things that could help improve what you see.
Questions Such As:
- Am I setting aside funds on a regular basis into a dedicated RRSP and/or TFSA account?
- Am I paying down any high interest rate debts?
- Are my savings being maximised?
- Am I living within my means?
If you like what you see and can answer with ‘Yes’ to these kinds of questions, then carry on. If not, then we’d like to suggest doing the following to help you get a better snapshot going forward when you next look at your financial inventory.
Lists Are Good. Make One of Your Own.
Make a list or a chart of everything you own (assets) and everything you owe (debts). This helps you to see where you’re at and what you need to change especially if debts outweigh assets. Doing this will give you a more accurate visual picture of where you stand financially.
Aim for the big picture view rather than trying to price everything down to the penny. Remind yourself that before you can manage something, you must be able to see it and measure it. Just this step alone will get you thinking about what you really need to do to build a better retirement.
Calculate When To Take Your Pension(s)
The decision of when to take OAS & CPP is highly dependent on your circumstances. For example, if your parents are alive in their 90s and your grandparents lived well into their 90s, you probably should think about delaying your government benefit(s) for as long as possible. The longer you wait to take your pensions, the larger your benefit(s) will be. That said, there is no one-size-fits-all answer here, so we recommend getting a professional opinion.
Continue To Work?
Why not? Many Canadians over 65 are deciding to keep on working. It’s one of the best retirement plans, in some cases. It’s good for the wallet and also good for maintaining your cognitive and social health. Whether you opt for a part- or full-time job, and whether it’s because you love what you do or you actually need to work out of necessity, collecting a steady paycheque every month can help make up for any financial shortfalls or an earlier lack of saving for retirement.
Sell Some Stuff
Everyone accumulates all kinds of stuff, ranging from collectibles of all sorts, art, fine cars, stamps, coins, antiques and so forth. Beyond their sentimental value, they may also have real financial value. Using the “you can’t take it with you” approach to your retirement, either make plans to pass down your heirlooms to family and friends or sell them.
Don’t Forget To Create An Emergency Fund
You’ll feel more confident about your future if you’ve built up a substantial emergency fund. You can grow it by adding unexpected sources of income – such as a stimulus cheque, a surprise tax return, inheritance(s), windfall(s), or the cash you make from selling some of your more valuable belongings. Take on odd jobs or capitalise on a hobby to make incremental income to stash away in your emergency fund. It will inevitably provide you some peace of mind.
Conclusion
No matter what lists you read about (and there are many out there to emulate) or try to implement, there will always be more you can do to ensure a better retirement for yourself. You have to make the decision to follow through with your goals as laid out on your list in order to achieve the retirement you always envisioned. For personalized guidance, please reach out to our partners at Interior Savings, Coastal Community Credit Union or Coastal Community Private Wealth Group.
