Retirement Planning

Plan on a Long Comfortable Retirement

To enjoy the kind of retirement you want means making the right investment and savings decisions as you move through your 20's, 30's, 40's and 50's - ever closer to that magical day when you can say with confidence, “I'm financially secure. Now is the time to begin the next - and potentially most personally rewarding - part of my life.”

1. How much are you spending and saving?
   
   As you approach retirement, the most important question you can ask yourself is “How much should I be saving to have an adequate income after retirement”.  After retirement the question becomes “How much should I be spending to ensure a continued adequate income during retirement”.  Both of these questions require we start by answering, “How much do I spend and how much do I want to spend?”
   
   Thanks to the magic of compound returns, the money you save and invest at an early age multiplies to much greater amounts than money saved during the years closer to your retirement.
   
   Capitalize on Your RRSP. RRSPs are among the best way to defer taxes today and build up a retirement fund for tomorrow - so be sure to make the maximum allowable contributions to your RRSP every year. And, consider a Spousal RRSP if your spouse is in a lower tax bracket than you - by splitting income, a Spousal RRSP can increase your tax and savings benefits over the long-term and be a powerful tool in your long-term retirement planning.
   
   
2. The risks to your portfolio.
   
   Know yourself. Take stock of who you are, where you want to go, and how long you have to get there. Find out what sort of risk you are comfortable with, and be sure to have the appropriate level of diversification among your investments to limitrisk. It's a good idea to have a professional advisor help you through this process.
   
   Younger investors - those with a long time to go before retirement - are usually in a better position to assume more risk. They may wish to invest a portion of their money in riskier investments, such as equities, with potentially higher returns. Older investors may opt for less volatile investments that deliver steady returns. Your professional advisor can help you assess your risk tolerance.
   
   
3. Where will your income come from?
   
   Canada's aging population and the resulting pressure on a limited tax base make it increasingly probable that the government will not be able to provide all the financial support you may need for retirement. In addition, there continues to be a trend of overall reductions in benefits under employer-sponsored plans. That means you should make your own plans to realize your retirementgoals.  Your RRSPs will become RIFs and may provide monthly income.  Your accumulated investments will help!

A Good Retirement Planning Strategy:

• Identify your life goals - including your goals during retirement. Do you want to maintain your current lifestyle? Travel? Retire early? Once you know what's most important, you can set your financial strategies to meet those goals, and measure your progress.
• Determine the income you will need during retirement. If you are in your 20's or 30's the usual rule of thumb is that you will need to replace 70 to 80 per cent of your pre-retirement gross income after you retire. If you are closer to or have started retirement it helps to put together a budget - what you'll need for food, shelter, travel, clothing and so on - and how much regular income you will need to pay for the things that will make it possible for you to enjoy your retirement.
• Determine your sources of income and benefits. These can include government programs and employer-sponsored pension plans.
• Determine the difference - how much you must replace from your own resources to have enough for the retirement you want.

Based on your needs, at Efficient Wealth Management, we can establish an investment and savings strategy that will deliver these necessary funds - and monitor your plans closely to be sure you stay on track.