The time when you could start planning your retirement at 50 has passed. Financial experts agree that the sooner you prepare for the future, the better.
An 80 year old man worked for Bell Canada until he retired at 55 years old and now lives comfortably off of his pension plan and savings. Susan Eng,the Vice President of Advocacy for CARP, describes the man as a financial “hero” but not a realistic model for today’s retirement outlook.
The future of retirement His scenario is in many cases not realistic for neither those approaching retirement now or for their children,mainly because his fully defined pension is unlikely in this job market unless working for a unionized environment.Also, when he opened a savings account in the 1970s, interest rates were in the double digits -an advantage that the younger generation today does not have.
This article was published by The Vancouver Sun on August 15th, 2013. To see this article and other related articles on The Vancouver Sun website, please click here
A Sun Life survey (2012 Canadian Unretirement Index Report) found that, only 30% of respondents said they expect to be fully retired by the age of 66,while 55% expect to still be working until age 71.
This means that reaching the “freedom 65” requires investing well consistently before half this age.
The most effective financial tool In your 20s and 30s, starting a life can sometimes get in the way of planning your future.
Marriage, children, and home ownership become top priorities, making it difficult to save large amounts.
But,live for todayand not thirtyyears from now is a mentality that finance professionals believe young Canadians cannot afford to make a habit of.
Financial planner Erika Penner cautions, “it’s important for the younger generation to know that lifestyle doesn’t mean wealth.All of the toys that we think are necessary; take away from our disposable income and our ability to save.” Instead, save what you can along the way.
Diversify: avoid the old “all-eggsin-one-basket” syndrome With the effects of the recent economic downturn still felt by many, Baby Boomers have learned the importance of relying on multiple methods of investing. Penner advises maximizing the tax benefit of an RSP aswell as opening a TFSA account (which she indicates as one of the best planning tools because contributions for it never go away).
Eng agrees with this lower-risk investment model in addition to finding ways to increase contributions to the government’s Canadian Pension Plan. She advocates for the 30+ age group to use CPP as a model for how to save from this point on.Eng proposes a simple strategy of putting aside $100 every week to contribute to investments, which may mean dining out less,but will bring you years closer to hitting retirement goals. For young Canadians, “the key is to start right away and keep it up.”