To properly plan your retirement, consult a pro!
There’s a lot to consider when planning for retirement. That’s why it’s best to work with a financial planner. They will help you define your financial and personal goals and propose savings and withdrawal strategies to achieve them. Don’t forget to check the AMF registry to verify the certifications held by this professional.
Here are some questions you’ll need to ask yourself to define your retirement plan:
Identify your sources of income in retirement
As a Canadian citizen, you will receive government pensions in retirement, such as the Canada Pension Plan (CPP) or the Quebec Pension Plan (QPP), based on the contributions you made during your working years. However, these may not be enough to maintain your current lifestyle. You’ll need to plan for additional income, such as:
- Personal savings;
- Your employer’s pension plan;
- Income from registered (RRSP, TFSA) or non-registered investments, as mentioned earlier;
- Rental income or proceeds from selling a property.
Determine your retirement age
At what age do you want to retire? Do you plan to stop working all at once or gradually? Answering this question will help you determine how much time you have to save. Keep in mind that you could spend more than 20 years in retirement, given the average life expectancy in Canada.
Identify your goals
Some dream of traveling the world in an RV, while others envision owning a house in the countryside. What are your dreams? The best way to achieve the projects that matter most to you is to carefully plan your retirement.
Calculate how much to save each year
In general, it’s recommended to save 10% of your average annual income (before taxes). However, the amount you need to save will depend on when you start saving, the lifestyle you want to maintain, and the nature of the projects you wish to pursue.
Your financial planner will help you calculate your current budget and build a retirement plan tailored to your needs. They will also guide you in choosing the right investment vehicles and simulate scenarios to help you visualize the amounts you’ll need. Finally, they’ll assist you in creating an emergency fund to handle unexpected events.
Debt and retirement
Have you accumulated debt and your retirement is approaching? Don’t panic. There are many ways to reduce or even eliminate your debt before retirement. Similarly, if you’re considering bankruptcy, in most cases, your RRSPs and pension funds will be protected from creditors.
Finally, since life is full of surprises, it’s always a good idea to review your retirement plan and strategies with your advisor whenever you experience life changes, such as buying a home or welcoming a new child. This way, you’ll stay aligned with your goals. Happy planning and best of luck!
