Do you know how much you need to save for retirement? Most people don’t. Fortunately, there are a few questions you can ask yourself to determine what retirement savings goals you need to implement today to have a brighter future tomorrow. Don’t worry if you’re far from ready; we’ll also explain what you can do to give your savings a well-needed boost.
What are Your Current Expenses?
One method to determine your retirement savings goals is to find out how much you’ll realistically need for retirement. As a rule of thumb, each person should have one year’s salary saved for every three years of income. To figure out this number, you’ll need to identify your individual expenses, like food, transportation, healthcare, mortgage and debt expenses, and then adjust your strategy to ensure you can afford the lifestyle you desire. Remember — it’s always better to save too much than too little!
How Long Have You Been Investing?
If you’ve been taking advantage of compounding interest for decades, it’s likely that you will have a significant nest egg brewing in the wings. However, if you only started investing a few years back, it’s unlikely that you’ll have much saved once you retire. Depending on how many years you have left, you’ll either need to invest more aggressively or rely on your pension, social security, and RRSP more heavily. Either way, talking to a financial advisor can ensure you’re on the right track no matter how many years you have to go until you retire.
Have You Been Maxing Out Your RRSP Contributions?
Not everyone can afford to max out on their RRSP contributions every year, but if you have done so, you’ll likely be well positioned for retirement. Every little bit counts, so if you can start adding more to your RRSP today, it’s wise to do so. Any money you contribute now will be tax sheltered until you withdraw it in retirement, providing you with some extra income.
Do You Have an Employee Retirement Plan?
If your company has a retirement plan in place, you’ll have to save less on your own. This is because each month a specific dollar amount will be deducted from your account and automatically deposited into your RRSP. Even better, if your employer offers a match program, you’ll get dollar-to-dollar contributions from your company for every dollar you put in. That’s free money!
Do You Have any Other Sources of Equity?
Investing isn’t the only way to boost your retirement savings. If you have a Life Insurance plan or income property, it can easily be sold for equity when you retire. Another popular way to access money for your retirement is through a reverse mortgage. A reverse loan pays you each month by accessing some of the equity in your home. It’s only available to help retirees who have accumulated wealth in their home to cover basic monthly living expenses.
Most Canadians do not have enough money saved by the time they retire, and it’s often not because they couldn’t save enough, but rather because they didn’t have a retirement plan in place. To help prepare you and your family better for retirement, contact us at The Beacon Group of Assante Financial Management Ltd. We’ll help you get the maximum return on your investments, reduce your risk level, create a tax strategy that works for you, and ensure that you have the most amount of money possible so that you can fully enjoy your retirement.