July 16, 2019
We get it, planning for retirement is complicated. Traditionally, Canadians have had two options: paying around $3,000 to get a financial plan from a fee-for-service financial planner or if they had over $250,000 in investable assets an advisor may use a program to build them a one-time financial plan that would likely never be updated again. Why is聽good financial planning聽so hard to come by? Because it鈥檚 so incredibly complicated. CPP, OAS, insurance, debt, borrowing, mortgages, children, RESPs, TFSAS鈥 the list of confusing financial considerations goes on. So, it鈥檚 no surprise that when it comes to people鈥檚 own retirement, there are often lots of grey areas that are unknown.
Here are 4 retirement questions that you definitely need to answer for yourself, and unfortunately, 4 retirement questions that most people can鈥檛 answer:
This is a question that almost nobody knows (if you expect confidence and accuracy).聽Almost no one knows what to do on a monthly basis to maintain their lifestyle. Unfortunately, this leads to most people experiencing a significant lifestyle decline when they聽put their kids through school, when they retire, or because of something unexpected.
There are many retirement calculators online that promise to produce your ideal retirement age with a few simple clicks, but retirement really isn鈥檛 a one-size-fits all calculation. The only way to know your exact retirement age is to build a聽comprehensive financial plan, and to update it every single time something in your life changes, or every six months (that鈥檚 how often we remind our clients to update their financial plan).
You鈥檒l see a theme start to develop here, there鈥檚 no one-size-fits-all solution when it comes to planning for retirement. Everyone鈥檚 situation is extremely different and rules of thumb, like saving 10% of your income, are quite dangerous as they may only apply to one person.
A recent poll from CIBC showed that a startling聽, so one thing is for sure having something is better than saving nothing. That being said, a lot of things go into calculating how much you will need in retirement. When you build your financial plan with 大象传媒, we鈥檒l look at things including, but not limited to:聽
Two ways the government helps out Canadians in retirement is through the Canadian Pension Plan (CPP) and Old Age Security (OAS). One of the most common mistakes Canadians make is overestimating how much they will actually receive in CPP and OAS in retirement. Unfortunately, it鈥檚 likely you鈥檒l have far less than you think.
Similar to the simple retirement calculators out there, there are many CPP and OAS tools online that will take your current age and then project it out by 鈥渪鈥 amount of years without layering the income sources, or taking into consideration the clawbacks from CPP and OAS you may endure.
The best way to avoid overestimating how much CPP and OAS you will have is by building accurate聽financial plan聽that will actually do the calculations for you.
It鈥檚 not news to anyone, that along with age comes increased risk of illness and injury. The costs associated with a critical illness or disability are often detrimental to someone鈥檚 financial goals, if they鈥檙e not properly protected.
Having the聽proper insurance聽implemented at each different stage in life is crucial to ensuring your financial plan stays the course.
While ensuring you鈥檙e covered during your higher risk years, starting out with insurance when you鈥檙e young and single is often one of the best ways to ensure you hit all of your financial goals throughout your life. In addition, when you鈥檙e young and healthy you鈥檙e often able to lock in a more affordable policy that can remain stagnant in cost all the way up to retirement.
To see how a potential illness or injury could affect your retirement savings, give our聽investment and insurance calculator聽a try.
Saving for retirement and financial planning are topics filled with myths and questions that many people can鈥檛 answer. The best way to ensure that you can answer any questions when it comes to ensuring you never experience a lifestyle decline when putting your kids through school, purchasing a house or in retirement is by聽. So go ahead, spend the next few minutes ensuring that you鈥檙e able to answer any questions when it comes to your financial future 鈥 we鈥檙e positive you鈥檒l be thankful you did.
