For most Canadians, retirement is a major financial goal that requires considerable financial commitment. 49% of Canadians hope to retire before the age of 60. (Statistics Canada, Summer 2007 Perspectives and Labour Force Survey). Whether you have already established a Retirement Savings Plan or are just beginning, it is never too late to begin saving.
Links to more info:
Retirement Planning: Seven KEYS to Success
1. Determine Your Retirement Income Needs
Retirement Planning is a primary financial goal for most Canadians. Whether you have a savings program in place, or are interested in one now, use a RRSP Calculator. Based on your contributions, this tool will determine how much will be available to you at your retirement.
Contact our office for DETAILED ANALYSIS of your retirement income needs and opportunities.
2. Remember THE Three "S"s
Save now, Start now and Stay invested. Begin by investing what you can and try to increase this amount every few months. Using a pre-authorized deposit plan allows you to make weekly, biweekly, semi-monthly, monthly, quarterly or annual contributions to your RSP. Remember, small amounts can accumulate significantly over time. No matter when you start investing, the key is to stay invested as long as you can. The longer you hold your investments, the more they will benefit from compound growth.
3. The Importance of Diversification
Diversification is the financial equivalent of not putting all your eggs in one basket. You spread your risk by investing in several different investments, therefore reducing the impact of one poor performer in our portfolio. Experts agree that the asset mix of your investments - safety, income and growth, account for more than 80% of your portfolio's return.
Retirement planning involves setting aside enough money during one's working years to provide income during retirement. A simple concept, but a complicated activity once investment choices, governments and taxes are taken into account.
We all start to prepare for our retirement years at different stages in our lives. The most effective strategy is to begin in your 20s or 30s with the purchase of your first Registered Retirement Savings Plan (RRSP).
A good strategy will carry you right through retirement - confident in the knowledge that your finances will last you for a lifetime. Regardless of your age, the key to a financially secure retirement is to start now!
While it's impossible to estimate exactly how much you'll need for retirement 30 or 40 years from now, it's important to start saving for it today. By contributing to a RRSP while you're young, you put time on your side and watch your savings grow tax-free over the long term.
4. Start Early
It doesn't take a lot of money to build a nest egg if you start early enough and let time work for you. Make your first contribution as early as possible in your working career to benefit from compound interest.
5. Contribute Regularly
Taking a slow and steady approach to building your RRSP, setting aside small amounts regularly is the best way to ensure your success.
Freeing up a large sum of money at year-end is often difficult and is the most common reason people fail to maximize or sometimes even make their annual RRSP contribution. Visit the RBC Funds monthly plan calculator for a quick view of how to meet your investment objectives.
6. Contribute THE Maximum
Make a point to contribute your maximum RRSP amount whenever possible. This will minimize your current tax bill, potentially reduce your marginal tax rate and build your nest-egg even faster.
7. Consider Your RRSP Untouchable
While it can be a valuable safety net in times of financial crisis, don't tap into your RRSP unless you absolutely have to, unless it is part your planned strategy. Funds you withdraw today will not be there when you need them at retirement.
Contact our office if you have any questions about Retirement Planning.
Copyright © 2011 AdvisorNet Communications Inc. All rights reserved. This article is provided for informational purposes only and is based on the perspectives and opinions of the owners and writers only. The information provided is not intended to provide specific financial advice. It is strongly recommended that the reader seek qualified professional advice before making any financial decisions based on anything discussed in this article. This article is not to be copied or republished in any format for any reason without the written permission of the AdvisorNet Communications. The publisher does not guarantee the accuracy of the information and is not liable in any way for any error or omission.