Planning your retirement at 50
So, you've already made it into your 50s. Time flies, eh? You're probably realizing that you have less and less time until retirement.
You're starting to count down the days to the moment you've probably been dreaming of for so long. Accordingly, you'll need to plan for this major step in your life.
While some people may simply need to keep the ball rolling with their usual savings habits, others will have to make up for lost time.
Whatever the case, here is an action plan that will help you reach your goals.
You'll need to carefully analyze your current and future finances.
So you've always been a math whiz, right?
Budgeting guru or not, the budget you'll need from now on will prove to be a little different. It should reflect new priorities that didn't seem so urgent not that long ago.
Start off by looking for expenses that should be eliminated once you retire and see if you can get rid of some of them now.
Consider your car or your clothing, for example. Ask yourself whether you really need that shiny new car that you'll have to pay off over several years. Wouldn't a lightly-used car in good condition do the job just as well?
When you retire, you won't need to travel as much, and you'll no longer need to constantly update your office wardrobe. Ideally, you should start adjusting to this reality now.
Next, your new budget should include an action plan designed to pay off as many debts as possible, including your mortgage.
A look at your current budget will undoubtedly reveal that your property is your biggest monthly expense. If you can cut this out of your budget, you'll save a great deal of money that you can use to invest in your future.
Finally, try in every way possible to put the most amount of money into your savings.
Tools and tips
Your retirement budget
Evaluate your retirement income and expenses.
Why budgets don't always work
Accuracy and self-discipline are key to sticking to your budget.
Knowing your financial health
A list of your assets and debts gives an accurate picture of your financial situation.
My budget tool
Available exclusively to Desjardins caisse members, the My budget management tool gives you an accurate picture of your everyday income and expenses.
First, set your retirement goals. What will your new life look like? Plunging headfirst into new activities? Frequent traveling? Staying home and helping to pay for your grandchildren's education?
Using your answers to the above questions and other personal considerations, make the best estimate of your retirement savings needs.
Think about where your income will come from when you retire. Do you have a group retirement savings plan from your employer? Are you going to continue working part-time? Will you have an Old Age Security pension?
Figure out how much extra saving you'll need to do to meet your financial needs for retirement.
Manage your level of investment risk with your approaching retirement in mind. The older you get, the wiser it is to in invest more in safer securities and less in potentially lucrative but riskier gambles.
Finally, review your strategy every year and adjust it as needed so you can:
- assess whether you've achieved your goals
- make any adjustments if your situation has changed
- get help from specialists if you're not getting the results you want
Continue to step 3 to learn more about how to do this.
Tools and tips
Couples can pay less tax
The higher-earner can contribute to his or her spouse's registered retirement savings plan (RRSP).
On the verge of retirement, you're faced with many complex issues. That's why it's incredibly important that you talk to an expert before making your next move.
Financial planners
A financial advisor's expertise will be essential for discussing your retirement income sources.
Your advisor can also help you determine whether your investments are on track and your projected retirement date is realistic.
Your employer
Talk to your employer about your group retirement savings plan so you can:
- learn more about the terms and conditions of your group retirement savings plan and group insurance for retirees
- attend a retirement planning seminar if your company offers it
Government plans
Get in touch with the Régie du rentes du Québec or Service Canada for a statement of contributions you've made to date.
Also, determine whether you'll apply for benefits before you turn 65 and, if so, whether penalties apply.