How can you achieve what you can't picture? A successful, happy retirement means doing what you want to do, and deciding what that is puts you on the path to getting there. Retirement planning requires goals. Most people start thinking about their retirement dreams in their early 40’s or later, but at 50 and beyond, it's still not too late. You have time at that point to look at what your desired retirement age is, you can look at options for making up any shortfall and you can put a plan in place. If you get a late start at retirement planning you may have to modify your original plan or reduce your current spending and ramp up your savings. Other options may be to delay retirement, work part time, or reduce your expected income at retirement. It you don’t know the numbers how will you know if you are on track?
Younger investors might need a little more encouragement to start planning. A long time horizon will certainly help when it comes to compounding the returns on their investments, but they are likely experiencing their most expensive spending years. Buying a new car or house, or starting a family is all financial transitions that need to be planned for. The value of starting early is an advantage even if you don't have a clear idea of what you want to do, and at least you should start a regular savings plan. The savings habit needs to be a part of your overall plan; otherwise the debt will get out of control.
The poll found that in hindsight, many people who had already retired would have taken a different approach to retirement planning. When asked what they would do differently, 45% of people who are retired said they would have started earlier. Forty-eight per cent of retirees said they would have saved more for their retirement and 31% would have sought professional advice sooner.
Dreams of winter getaways and increased leisure time devoted to hobbies don't match reality for today's retired Canadians, a survey suggests. Although 62% of Canadians under the age of 50 selected winter holidays as their preferred retirement lifestyle, only 30% of those who are actually retired say they escape the worst months of winter. More than half of non-retired Canadians said they expect to be able to spend a lot of time pursuing hobbies, but only 35% of current retirees said they pursue hobbies to any great extent. Contrary to the perception that retirement is endless days on the beach or in a rocking chair, the fact is that priorities shift as people move from one life stage to another. A great number of Canadians have underestimated their retirement needs, including the cost of long term care.
Similar to previous polls, the survey also found that many younger Canadians have not even begun to plan for their golden years. About half of those under 50 said they have not thought about retirement, and not surprisingly, those who haven't considered retirement are less likely to have accumulated savings or calculated how much they will need to retire. Most Canadians under 50 years old are too busy in their careers and raising children to seriously consider what they will do when they retire. That approach could be a mistake. Retirement should be something Canadians can look forward to if they plan and save throughout their careers.
An Ipsos-Reid poll conducted for RBC suggests that more than half of Canadians aged 18 to 34 do not plan to contribute to their retirement savings this year or don't even have an RRSP. Young Canadians who ignore RRSPs are missing a golden opportunity. There is no overstating the great advantage of youth when it comes to building an RRSP. The sooner you start the greater benefit that compound growth will have on your portfolio.
A third poll, conducted by Ipsos-Reid for Scotiabank suggests that Canadians may be more concerned about paying down debt than saving for retirement. Nearly 80% of those surveyed said paying down debt is their number-one financial goal, while 60% selected retirement saving as their top goal. The Scotiabank survey also found that only 38% of Canadians are confident in their ability to achieve their financial goals even though they have a strong desire to reach them.
A lot of people don’t know where to begin to plan for retirement. Here is where a financial planner can be really helpful in steering you through that process. A financial planner will do an asset allocation review for you, projections of how much you should be setting aside each year, identify what your tax savings are and how much your investment will grow on a tax-deferred basis in an RRSP.
Clearly more Canadians need to take action and establish a written financial plan to set out their goals.
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Sharon has over 25 yrs experience
in the financial services industry.
She holds the Certified Financial
Planner (CFP) and the Financial
Divorce Specialist (FDS)
designations. Sharon is a member
of the Academy of Financial Divorce
Specialists and has completed
training to help divorcing couples
reach a negotiated settlement
around financial issues. Sharon is
instrumental in helping and
supporting her clients to gain
clarity and direction. She works
with women experiencing transition
in their life, whether from job
loss, the loss of a life partner,
or a relationship through
separation or divorce. Sharon
provides education and guidance and
takes the time to get a clear
understanding of her clients’
goals. She makes a difference in
people’s lives by designing a
Financial Plan which includes all
aspects of Financial Planning
including building wealth,
protecting clients and their
families against illness and death,
cash flow, retirement and tax
planning. She has always put her
clients’ needs above her own with
encouragement and support no matter
what obstacles life throws in their
way. She has helped many families
achieve a comfort level in their
financial lives, knowing she is
looking out for their best
interest. Sharon is also an
experienced speaker on topics
relating to women such as “Insights
to Financial Transitions”, “Worry
or Wealth”, “Financially Planning
Your Divorce” and more.
Sharon Alderson is a Silver author on EvanCarmichael.com
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