04 July, 2022 Financial Planning Retirement

Retirement Planning Part One: Six Things to Consider When You Plan

senior woman happy with map

A lot of planning happens over the course of your lifetime: Choosing where to go to school, planning a wedding, buying a house or a car.

But one crucial plan that often falls by the wayside is your retirement income plan. 

Generally speaking, most of us need about 70–80% of our current salaries to continue to enjoy our lifestyles through retirement.

 

Here are six key things I tell my clients to keep in mind when they start planning for retirement.


1. Plan for the lifestyle you want.
Consider the life you dream of when you retire. Is it a year long cruise? A home in sunny Florida? Or deciding you finally want to play an instrument? These are goals you could accomplish if you plan carefully. 

Start by setting goals, understanding your money and creating a budget for your retirement payments. How much do you want to put into your RRSP each month, each year? How much do you want (or need!) to invest yearly? These are important questions to ask yourself when planning for retirement. 

Even harder is coming up with the specific steps you need to take in order to make your plans a reality. Here are a few things you can do to start:

  • Set a retirement date — You’ll know how many years to plan for if you have a rough idea of when you’ll retire.
  • Estimate your retirement expenses — To calculate how much you’ll need to save, think about all your expenses and goals for retirement. Everyday expenses, like bills, transportation and clothing, plus travelling and other "fun" expenses should be factored in.
  • Learn what benefits you have — Some companies have group RRSPs that you can contribute to — take advantage of matching if you can! You may also qualify for CPP and OAS benefits. 


2. Make the future as predictable as possible.
Plan for the unexpected! — It’s always best to have emergency funds for life's unexpected moments, like a damaged roof, flooding, or medical issues. Plan to have about 3–6 months of your total living expenses safely tucked away for emergencies. 

Pay into your future — Figure out a percentage of your income that will go towards your retirement savings as the years go by. (i.e. 20% or your monthly income).

Know how much you’ll get in benefits — Do you qualify for government benefits? They will be a source of income when you retire. Spend some time figuring out how much you’ll likely be paid through your CPP and OAS. A lot of it is determined by how much you contribute while you’re working. But you can also find out rates and the minimum and maximum amounts on the Canadian government website. 


3. Figure out how your current spending will affect spending in your retirement.
This is a big one! If you want to continue to live the lifestyle you’ve become accustomed to while having a steady working income… you should figure out how much money you spend monthly on things like groceries, dining out, entertainment and travel. If you know how much you spend now, you’ll be able to figure out how much to save without making sacrifices during your retirement.
 

4. Focus on long-term investing.
Look into how you can invest in your retirement. One way to invest in your future is to save through tax-free savings accounts, government benefits and your employer's pension plan.
Another way to grow your wealth for (and during) your retirement is to invest in the market through stocks, bonds and GICs. You can also determine how much you want to invest and how much risk you’re willing to take with your money.  

 

5. Revisit your retirement plan and adjust to lifestyle changes.

It’s important to check in on your goals. You should periodically revisit your plan to make sure you’re still on track to meet your retirement goals. Have your goals changed? By checking in on your plan, you can adjust to any changes that may have arose in your life or any lifestyle changes you’ve made and would like to consider continuing into retirement. 

 

6. Work with a financial advisor.

Does all of this seem daunting or confusing to you? To help make the most out of your retirement, consider working with a financial advisor to help plan the way you save and invest your money for retirement. Our financial advisors will create a tailored plan for you, based on your circumstances, your family, your needs, and your level of risk taking —we have you covered!

 

At Bick Advisors, we’ll help you understand retirement planning by breaking it down into bite-sized pieces. We’ll work with you to understand your unique and individual circumstances to create a plan. Whether you're in your 20’s, 30’s, about to retire or already retired we can help! Contact us today.