Before I retired, I had
dreams of doing nothing, or travelling or just spending time with friends. I
have done a few of those things, but I have also done some things that were not
even on my radar when I thought about retirement. I give workshops, I mentor, I
am on three advisory committees to help seniors. My life is exciting but very
different than I thought it would be at this time of my life.
I see this question being
asked a great deal “What do you want to do when you retire”? It may be a long
way off and it is a hard question to answer. By the way what you think or would
like to happen probably won’t. This doesn’t mean don’t think about life after retirement,
it is important to think about life after you stop earning a regular paycheque.
Whether your goal is to travel, learn a new skill, indulge in hobbies or simply
maintain your current standard of living, you’ll need to rely on savings to
cover the cost of these activities, in addition to your everyday expenses.
By doing some groundwork well
you can and learning how much you need to save, you can let your dreams drive
your retirement, rather than letting available funds drive your dreams. Here
are three things you should think about now that may boost your retirement
savings, and some tips to help you a few years down the road.
Cut spending. Easier said
than done, however, most experts suggest that you should save at least 10% of your
income, with a portion of that put aside for emergencies. It’s easier than you
think to find some extra cash for your savings by trimming unnecessary spending,
but it does require some research and some work and discipline. I suggest if
you are not saving at all start by saving 5.00 a day, (which is $1,825 a year) by
setting up an automatic withdrawal program from your checking account to your
savings account or an investment account. Ask the bank to increase the $5.00 gradually
over time to $20 a day. $20 a day adds up as it is $7300 a year. Once you have
the money flowing set up either a Tax-Free Savings Account or a Registered Retirement Savings Plan so you
stay on track.
Start small. If you’re able
to save as little as an extra $5. 00 a day, you can invest it in an RRSP or
TFSA through mutual funds or the stock market, which can offer good returns.
Whatever you do, spending less now means more for your retirement.
Maximize investments to pay
less tax. All Canadians have access to a variety of tax-sheltered accounts,
like RRSPs, RESPs and TFSAs, which delay or reduce taxes. Take advantage of
these accounts by using as much of your contribution room as possible each year
Become debt-free. Eliminating
debt, before you stop working, decreases stress on your reduced income – and
leaves more room to do what you want in retirement. As soon as you can, start
paying off credit cards, mortgages and loans, so you’re free of these burdens
when you retire.
Consider downsizing. As you
near retirement, think about lowering your larger expenses, like your home and
vehicle. If you’re paying for square footage that you don’t need, opting for a
smaller home will allow you to invest more for later. You can also save on car
expenses, like gas and insurance, with a more affordable, fuel-efficient
vehicle.
Work longer and ease into
retirement. Retiring doesn’t mean you have to stop working entirely. Working
fewer hours or getting a part-time job is a great way to transition into
retirement and maintain steady cash flow. Try calculating how much your
retirement income will be with government pensions and other programs. And,
when the time comes, you can choose various registered and non-registered
retirement income options, including RRIFs and annuities.
Prepare for the unexpected.
Most people underestimate healthcare costs in retirement. As you age, your risk
of developing a critical illness increases. It’s important that your retirement
plan sets aside funds to cover personal healthcare. You can also investigate
health and critical illness insurance from private companies.
Share wonderful details concerning your blog site, Blog truly useful for us. Early Access To Your Superannuation
ReplyDelete