6 key retirement planning decisions
Whether you plan to retire early or late, you need to learn how to plan your retirement
The New Year brings with it many reasons to consider our future. We typically start by making resolutions that will result in healthier and happier versions of ourselves. Without a plan, though, do these resolutions ever become a reality? It is often said that failing to plan is planning to fail. With that in mind, this is the perfect time to make note of a few simple best practices that you can easily put into place to help ensure a happy and healthy retirement.
1. Start now
It is never too early, or too late, to start planning. Whether you’ve just joined the workforce or are approaching your retirement, it’s important to get organized. Start by defining each retirement goal (e.g., income, travel, purchase a vacation property, etc.) and listing them in order of importance so that you can assign a savings strategy to each.
2. Implement a disciplined savings plan
The key to saving is to do it early and do it regularly. With this in mind, consider setting up an automatic savings plan to transfer funds on a consistent basis (i.e., every pay) into a retirement savings account. Invest a portion of every bonus you earn, if you’re so lucky as to get a bonus. Look at your employee benefits package to see if you have employer-sponsored savings plans that are available to you.
3. Understand the options available to you
There are many types of plans and, quite literally, thousands of investment products available to help you reach your retirement goals. Start with the basic account types including Registered Savings Plans (RSPs), Tax-Free Savings Accounts (TFSAs) and non-registered accounts.
4. Be strategic with tax planning opportunities
In addition to understanding the possible tax opportunities available on contributions and withdrawals for the account types mentioned earlier, it is also important to understand and consider what type of investment products you will utilize in each. For example, it would be wise to hold investments that are taxed more favourably in non-registered (taxable) accounts and hold other investments within the tax-deferred and tax-free structures of RSPs and TFSAs.
5. Review and update your plan at least once a year
One consistency in life is change. Whether it is your employment and subsequent income level, changes to relationships or the birth of children, always adjust your plans to reflect your life today. It may mean that you are able to start contributing more to your savings plan, or that you have to re-evaluate your goals and the time it may take to reach them.
6. Work with a professional
Successful retirement involves considering other important factors outside of investing and saving. For example: prospective retirees should also consider estate planning and charitable giving. As retirement planning may be a complicated process, you may want to consult a qualified and experienced financial professional. They will not only ensure you take advantage of every opportunity available for you, but they will also help you stay disciplined and on track.