You’ve finally made the decision to retire and you’ve given yourself a deadline in which to achieve it! Well done! For many Canadians, the hardest part about retirement is choosing when to transition from a career they’ve spent most of their adult life building into a brand-new phase of life. Now that you’ve put a timeline in place, the next step is factoring in your finances. Retirement is meant to be enjoyed, so planning for your income and your lifestyle will help shape your retirement plan and prepare you for a future of financial freedom.
What are your goals?
Are you imagining plenty of tee-off time in your free time? Or maybe you’re looking forward to spending more time with the grandkids or taking that extended vacation you’ve wanted to for years? The first step for retirement planning is identifying your goals. No matter how big or small, the best way to work towards accomplishing those retirement goals is to plan for them now. With an idea in mind of how you’ll fill your days and weeks, we are better able to estimate how much savings will be required for retirement.
Top financial factors
People often plan for retirement without taking into account some of the major influences that will impact their savings or lifestyle. Here are the top three financial factors to consider:
1. Debt
Too often, I see people transition into retirement while still carrying a large amount of debt (and paying high interest rates). This can be anything from credit card debt, a line of credit, to a hefty mortgage. Rather than carrying a substantial debt load into your retirement, planning for debt reduction should be one of your top financial goals.
2. Cash flow & income sources
What will be your sources of income during your retirement? Do you have a company pension, RRSP’s, TFSA’s or other investments and savings? It is recommended that you contact your pension office and request an estimate of your projected pension income and also contact Service Canada and request a projection of your CPP and OAS at the time of your retirement as well. These savings and income sources will be factored into your plan and help us determine where we stand and what additional savings are needed.
The Government of Canada has a great tool called the Canadian Retirement Income Calculator which can help outline and provide a snapshot your retirement income sources.
3. Risk management
Planning for your retirement would be incomplete without also factoring in strategies for dealing with the unexpected. Situations out of our control, such as short-term job loss, injury or illness, will impact your savings so it’s important to have strategies in place to safeguard against these occurrences. A well laid plan will allow you to remain financially flexible in such circumstances. Remember, even the best plans may need to be adapted.
Keep in mind that whenever a retirement savings plan is developed, it can only factor in estimates of your CPP, OAS and investment returns. There is no way to guarantee your actual financials before retirement, which is why it’s important to regularly review your financial plan and be committed to an investment and savings strategy. Speak with me, Darryl Smith, today at (705) 434-0562. Together, let’s review your retirement timeline and develop a plan for a future that is free of financial burden. Enjoy your retirement with a customized plan from Synergy Life Financial!