Planning is the best thing you can do to make your retirement life more stable. People who start early and don’t wait until the last minute are likely to have a dependable stream of income and funds to comfortably support their retirement. So, if you’re in your productive 30s or 40s, it’s about time to start retirement planning which requires some effort on your part. We have come up with a brief financial checklist to help you determine whether you’re ready for retirement:
1. You’re debt-free
An increasing number of Canadians outlive their savings following the rise in expected life expectancy. According to Statistics Canada, more than 40% of people over 65 were still carrying debt in 2012. Your financial freedom will start fading away after you cross 55 with bigger debts. Credit-driven lifestyle is making it difficult for people to enter retirement debt-free. However, you can plan early to get rid of all your major debts and ensure peace of mind and financial stability in the later part of your life.
2. You own your home
People often wonder whether they should rent or own assets after they retire. What is the ideal situation in your case? It depends on your unique financial circumstances to determine a good option for you. However, it’s better to have a mortgage-free home which would be less expensive than renting a house. If you can’t enter retirement with a mortgage-free house, make sure to sign up for mortgage life insurance.
To make life easier, start budgeting and estimating your expenses in retirement taking into account your lifestyle. For instance, if your current household income is $80,000, would you be able to continue the same standard of living at $45,000 after you retire? If you think your expenses will be more than your expected retirement income, save or invest more or work longer to materialize your retirement dreams.
3. You have a diverse investment portfolio
How much income you can generate from your pension plans or investment accounts such as RRSP, TFSA, CPP, etc. One important factor to consider here is that your risk tolerance at 30 will be different form your risk tolerance at 65. Life starts getting complicated as you enter your retirement years. For example, taking into account inflation, the cost of living can increase significantly. In other words, you must plan and adjust accordingly. So, make sure to have a stable, diverse investment portfolio that ensures both safety and growth. It’s recommended to take advantage of simple investment plans like RRSP and TFSA.
A person can expect to get the Canada Pension Plan (CPP) benefits at the age of 60. You have the freedom to either opt for early payments (before 65) or you can delay your monthly benefits (after age 65). This is an example of how you can make small changes to your preferences to adjust and improve your financial well-being. Don’t forget to consult a financial planner to have your situation thoroughly evaluated. A qualified financial planner will provide objective guidance based on your goals and current financial circumstances.
About Kewcorp Financial
If you’re in Edmonton, a team of highly dedicated and professional financial advisors are ready to help you plan for retirement. For all your financial planning needs, please contact Kewcorp Financial a 780-449-6292 or click here.
Did you know?
Almost 6 out of 10 Canadian adults don’t know how much money they need to save in order to maintain their desired standard of living in retirement. Don’t be one of them, start planning for retirement today.
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