Retirement Planning Guide: Tips for a Safe, Secure, and Fun Retirement

Also, remember that the cost of living is rising every year and as you get older, you might have to take care of some medical expenses if you do not have adequate health insurance.

If you want to purchase a home or pay for your kids’ education after retirement, you need to make the necessary adjustments now. Once you understand your post-retirement expenses and withdrawal rate (the amount you will be taking out of your accounts every year), you can start factoring these into your retirement plan.

Once you know when you need to retire and know how much your post-retirement spending needs are going to cost, you can begin calculating the amount of money you need to save for investment. A good way of doing this is by using a retirement savings calculator.

A retirement savings calculator such as the one from Wealthsimple takes your current age, retirement age, current salary, how much you plan to save per month, and your post-retirement expenses and tells you how much you need to save for retirement, as well as how much you will retire with at your current pace. Wealthsimple can also help you chart an investment strategy, and with their powerful suite of products, they can help you manage and grow your money.

Assessing Investment Options

As you plan your retirement, you should also think about the balance between risk and returns. How much risk you are willing to take will often determine how much your returns are going to be, as well as the investment options you choose. For example, do you want high risk, high return investments such as stocks or do you want safer investments that have lower returns such as treasury bonds?

Ideally, your investment portfolio will be a mix of investment options with various levels of risk. You have to make sure you are ok with the risks that are in your portfolio. You also need to understand the difference between necessary risks and those that are not worth it.

Being comfortable with the risks in your portfolio often means giving enough time for your portfolio to stabilize. A lot of investors pull out once an investment option is not doing well. Because you are investing for your retirement, it is important to not bail on investment options that are underperforming just because there is some noise in the market. They may be underperforming now but over the long term, they will still give you the returns you are hoping for.

Think About Saving in a Registered Retirement Savings Plan (RRSP)

A Registered Retirement Savings Plan (RRSP) is an account that you register with the federal government, which is used to save for retirement. Investing in an RRSP is often pushed aside for other saving options, mainly because it adds another obligation for the person saving in the account. Additionally, a lot of people think about it too late due to the obligations they might already have as they get jobs, raise a family, and pay for their house.

However, RRSPs are a great savings option because they come with several benefits. The contributions made to RRSP are tax-deductible. Also, you do not have to pay tax for all the savings you put in your RRSP. As long as you keep your money in the RRSP, the tax savings will be compounded, which means your savings will grow a lot faster than if you opted for most other investment options.

RRSPs can also be used to provide an income once you retire. This is done by converting the RRSP into a Registered Retirement Income Fund (RRIF) or annuity.