For most Canadians, retirement is a major financial goal that requires considerable financial commitment. 49% of Canadians hope to retire before the age of 60.* Whether you have already established a Retirement Savings Plan or are just beginning, it is never too late to begin saving.
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SEVEN KEYS TO SUCCESSFUL RETIREMENT PLANNING IN ST. JOHN’S:
1. DETERMINE YOUR RETIREMENT INCOME NEEDS
A primary financial goal for most Canadians should be Retirement Planning. Even if you don’t have a savings program currently, but are interested in one, the first step is to decide just how much of your money will be available to you when you retire.
Contact our office for a DETAILED RETIREMENT PLANNNG ANALYSIS of your retirement income needs and opportunities.
2. REMEMBER THE THREE "S"S
Start now, Save now, and Stay invested. START by investing what you can, when you can, and attempt to increase the amount every few months. Using a pre-authorized deposit plan can help because it ensures you SAVE NOW by making regular contributions to your retirement savings plan. Keep in mind that even small amounts can grow a lot over time. It doesn’t matter when you start investing, the key is to STAY INVESTED as long as you can. The longer you keep your savings, the more they will benefit from compound growth.
It’s also important to try and increase the amount you contribute when you can. The more you can add early on, the better it will be for you in the long run. You don’t want to place yourself in financial stress early on, however, just to keep growing your retirement plan. Only contribute an amount that you feel comfortable doing.
3. DIVERSIFICATION IS IMPORTANT
Diversification is the financial way of saying, “don’t put all your eggs in one basket”. By diversifying your portfolio you spread out your risk in several different investments. That way, you lower the impact of one poor performer in your retirement portfolio. Experts agree that the mix of assets in your investments – to account for safety, income and growth, should make up more than 80% of the return of your portfolio.
Retirement planning in St. John’s involves making sure you have set aside enough money during your working years to provide enough income during your retirement. It is a simple enough concept, but a complicated activity to take on by yourself once investment choices and taxes are considered.
Everyone prepares for their retirement years at different points in their lives. Experts suggest that the most effective strategy is to start out in your 20s or 30s by buying your first Registered Retirement Savings Plan (RRSP) or opening a Tax-Free Savings Account (TFSA).
A good financial plan will carry you right through to retirement. You can be confident in the knowledge that your finances will last you for a lifetime. It doesn’t matter how old you are, the key to a financially stable retirement is to start now!
While it might be difficult to estimate exactly how much you may need for retirement in 30 or even 40 years, it is of utmost importance that you start saving for it today. By putting your money into a RRSP/TFSA while you're young, you ensure that time is on your side. You can begin to watch your savings grow tax-free over the long term.
4. START RETIREMENT PLANNING IN ST. JOHN'S EARLY
It doesn't take a whole bunch of money to start building your nest egg if you start early enough and let time work for you. Make your first deposit as early as possible in your working career so that you can benefit from compound interest. Your money makes money while it sits in your account. The more money in the account, the more interest you make.
Compound interest is interest that is earned on your entire contribution, not just new deposits. That means that you not only earn interest on what you contribute today, but on funds (and the interest already earned) on earlier contributions. It is interest on the interest you’ve already earned.
5. CONTRIBUTE TO YOUR PLAN ON A REGULAR BASIS
Take a slow and steady approach to building your RRSP/TFSA. Setting aside smaller, easy-to-manage amounts regularly is a great way to ensure your success.
This is because freeing up a large sum of money at year-end (for example) is usually harder to do and is therefore the reason most often used by people who fail to maximize or sometimes even make their annual RRSP/TFSA contribution.
6. PROVIDE THE MAXIMUM AMOUNT YOU CAN
Make a point to contribute your maximum RRSP/TFSA amount whenever possible. Make sure to determine whether an RRSP, TFSA or both are best to help build your nest-egg.
7. THINK OF YOUR RRSP/TFSA AS UNTOUCHABLE
While it can be a tempting safety net in times of financial crisis, try not to take funds out of your RRSP/TFSA unless you absolutely must, except if it is part of your overall retirement planning strategy. Because funds you withdraw today will not be there when you need them at retirement.
Contact our office if you have any questions about Retirement Planning in St. John’s.
*Statistics Canada, Summer 2014 Perspectives and Labour Force Survey.