Retiring is one of the most common life goals every Canadian has. Everyone has their own unique view of what retirement is to them. For some, it’s all about slowing life down, spending more time with family and friends, and getting away from the grind and stress of their busy careers. Others envision plenty of golf and fishing days, while some dream of globe trotting and trips to Paris to shop on the Champs d’Elyses.
But whatever your idea of retirement entails, those with a comprehensive financial plan are almost 3 times more likely to feel that they are on track to retire in the lifestyle they want.
72% of respondents with a comprehensive plan agree that if anything should happen to them, their family would be looked after - while only 38% without a plan agree.
Retirement planning is about managing your money so you can make the most of your retirement years. Your retirement plan should balance your needs, wants and the reality of your finances.
Reasons to have a retirement plan
- Set goals – A plan helps you set goals for retirement, including the age when you want to stop working and your lifestyle.
- Know how much to save – It can help you figure out how much money you need to save to live comfortably in retirement.
- Choose what to invest in – A plan can guide your investment choices based on your goals and your risk tolerance.
How much you need to save depends on
- Your age – When you start saving makes a big difference in how much you need to put away. The younger you are when you start, the less money you have to put aside, thanks to the power of compounding.
- Your lifestyle – Do you plan to stay home, downsize or travel the world? The amount you’ll need to save will depend on the life you plan to lead when you retire.
- Federal government benefits – You could be entitled to government retirement benefits like the Canada Pension Plan (CPP), Old Age Security (OAS) and the Guaranteed Income Supplement (GIS). If you’re eligible for income from these government programs, you might not have to save as much.
A Registered Retirement Savings Plan (RRSP) is an account, registered with the federal government, that you use to save for retirement. RRSPs have special tax advantages.