Planning for a Secure Retirement

The Future

With modern medical advances and increased standards of living, people can plan on spending one fifth of their lives in retirement. Everybody has heard it before: It's never too early to start saving for your retirement. It's true. The effect of compound interest is significant.

Planning for retirement can be overwhelming. But no matter what age or stage of life you are in, there are many options. Depending on your age, stage in life, and goals and expectations, your retirement plan will vary. That said, below are some general guidelines on developing the best retirement plan for you. 

Retirement Planning for Every Age

20s: Never Too Early 
If you are in your twenties, saving for retirement is probably the farthest thing from your mind. Buying a home seems a million years away, let alone retiring.  While you probably still have a student loan, now is typically the time when you start a salaried position and begin to earn regular paychecks. If you have any, paying down debt should be your top priority, especially if you have anything owing on your credit card. 

However, your twenties are also a smart time to start contributing to RRSPs because time is on your side.  The power of compound interest means that your hard earned money can grow exponentially. And contributing isn’t as daunting as it sounds.  If you can afford to buy a $4 latte a couple times a week or part with $40 on a night out on town, you can afford to contribute to an RRSP. Every little bit counts!

30s: Settling Into A Plan
In your thirties, you’ve hopefully paid off your student loan and are thinking about settling down. You have a steady income but are also looking at increasing your expenses – a new home, car, or even family member! 

Juggling new expenses and responsibilities can be overwhelming and stressful. If you don’t already have a financial plan, now is an important time to create one. Still using one from your twenties? It’s time you revisit it to see if it is still best serving your needs.

While you might have more pressing expenses, don’t let that be an excuse not to contribute to your retirement plan. Pay yourself first by setting up automatic deductions from your paycheck and you will hardly notice a difference at the end of the day. Now is also a good time to assess your overall investment risk tolerance and think about incorporating higher return investment vehicles. You have plenty of years until retirement so you don’t have to worry about short-term market fluctuations. 

40s: Halfway There
If you are in your forties but don’t have a retirement plan – don’t panic or give up. It is not too late; you still have over 2 decades left to save and invest. 

That said, now is not the time to hit the snooze button. You should now have a clear idea of how much you can reasonably expect to contribute every year, and how much you will need in retirement to maintain the lifestyle you desire. If you act now and invest wisely, you should be able to contribute enough to live your retirement years in comfort.

When it comes to RRSPs, always take advantage of an employer matching RRSP plan (that’s free money!) and reinvest any tax returns back into your RRSP. 

50s: Crunch Time
Finally, your expenses are starting to decrease, and you’re entering your peak earning years. For these reasons, your fifties are an excellent time to ramp up your retirement contributions. 

It’s also time to pay closer attention to your Return on Investment (ROI) to make sure your investments are accumulating as they should. It is also wise to diversify your assets – don’t place all your eggs in one basket. Do you need to rebalance your investment allocation? Real estate, your RRSP, and other investments should all come together to create a balanced portfolio, thereby reducing your risk. 

60s +: Home Stretch
Your sixties typically mark you final working decade and is the time to seriously assess your retirement plan. How close are you to reaching your goals? Do you have enough to retire comfortably in the next few years? Will you be retiring at 65, 67, or older? 

Once you are close to retirement, it is important meet with a financial expert to come up with a withdrawal plan. Any amount that you have in an RRSP must be transferred into a Registered Retirement Income Fund (RRIF) at 71 years of age. Remember that any money you withdraw from your RRIF will be taxed based on your overall income, so it’s important to take it out incrementally to reduce your total tax amount. 

What’s the best age to contribute to your RRSP? The answer is now.

Let Us Help

At G&F Financial Group, we understand that not everyone falls into these typical age stages. Whatever your situation, there is a retirement plan that is right for you. We can help you find it. Ask us about our RRSPs and Term Deposits.