Saving for retirement can be a considerable undertaking that leaves many people feeling uneasy at best and anxious at worst. Here’s a 3-step blueprint to a retirement plan for Canadians to help you begin.
You might not be planning to retire tomorrow, but whether that time is soon-ish or far in the future, it doesn’t hurt to have an inkling of how you’re going to approach it. Saving for retirement is what many Canadians often cite as one of their biggest financial concerns. Here are 3 basic steps to a retirement plan for Canadians.
The first step is figuring out how much you will spend when you are retired. Your lifestyle will play a significant role in how much money you will need to save to be able to retire and still live as you wish. Determine where you will be living and how you will account for other necessities such as healthcare and everyday items such as food and household or even what your means of transportation will be. If you plan to own pets, you will want to know what types and how many you plan to have. Determining your lifestyle will help you decide how much money you need to save to ensure that you can live comfortably.
Once you understand how you will live, then you will need to calculate how much those expenses will cost. Determine what you will pay for your mortgage/rent monthly (or if you own a property outright), how much your taxes will be, what type of vehicle you will drive, where your food comes from (i.e., eating out versus dining in, etc.), what household supplies you need to purchase, and any other expenses that you will have to account for. Understanding your monthly costs will help you set up a budget to help you live within and not above your means.
Whether you have investments or plan to take from retirement or if you plan to source your money from social security or pension means. Know how much you will have coming in and ensure that you have at least enough to cover your expenses, if not a little more. Part-time work might also play a role in helping you maintain a higher standard of living once you retire from your regular, full-time jobs. If these numbers balance or the income is more than the spending, then you know that you wish to live/are currently living.
These are 3 significant steps to start ensuring that you have enough funds to be able to retire and that you can afford the lifestyle you wish to live. Once you balance those numbers, you can determine if you can afford to retire when you want to or need to save more before you are ready. Planning is critical to ensure that you have what you need once you decide that it’s time for you to retire.