There are five main phases of retirement:
1. Beginning the planning process
2. Implementing the plan and building the retirement fund
3. Monitoring progress
4. Approaching retirement
5. Retirement and distribution of assets
Plan your retirement
Retirement doesn't happen overnight. Planning your retirement is the safest means of attaining your retirement goals and accumulating enough capital to ensure the quality of life you strive for.
Good planning means thinking about the following elements:
1. The increasing likelihood that you will spend more time in retirement.
2. The desire to achieve your retirement goals.
3. The income required to pay for regular expenses.
4. The ability to save capital and increase your wealth.
Have a plan
Start with your vision for retirement. Do you want to travel? Pick up a hobby? Buy a cottage? Scale down? Once you know the lifestyle you want, work backwards to determine how much money you'll need to support that vision.
Review it regularly
Now that you have a plan, don't just shove it in a drawer. Review it annually, and as life circumstances change to make sure it matches your current goals, timeline and risk tolerance. Remember, your needs will change over time.
Adjust as you go
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FAQ:-
How do I balance my priorities between mortgage/ Kids/ Retirement savings?
Your working years can find you juggling lots of different financial priorities. You might be paying your mortgage, putting children through university and caring for your parents. It can be a lot to handle and it can sometimes seem overwhelming.
Here are three strategies that can help you balance your priorities and work towards multiple goals.
1. Create a budget
Your first step is to create a budget:
• Determine your after-tax income.
• Know where your money goes. Write down your monthly expenses and recurring annual expenses (such as membership fees and insurance payments). One way to do this is to keep track of what you spend for one month as you spend it – write it down and keep receipts even for small things like coffee or lunch.
• Determine if you are spending more than you earn. The old wisdom to “spend less than you earn” still holds true and is one of the best ways to build retirement savings. If your expenses exceed your income, work with our Advisor to find ways to cut expenses – for example, by consolidating debt to reduce your interest costs.
• Calculate your net worth. Your net worth is the total of everything you own (your assets) minus everything you owe (your liabilities). Calculating it annually provides you with an overview of how you are doing financially. Seeing how your debts stack up against your savings can help you set priorities for your finances.
•Make savings a priority – adjust your expenses so that you can set aside even a small amount of money on a regular basis for savings. To build your savings over time, set realistic goals that fit your lifestyle. Automatic deposits into your Registered Retirement Savings Plan or a Tax-Free Savings Account can help you stay on target to reach your savings goals.
2. Take advantage of government incentives
Numerous government incentives can help you save more effectively:
• CESG. If one of your goals is saving for your child’s post-secondary education, you may want to use a Registered Education Savings Plan (RESP). Not only are earnings in the plan tax-deferred, but the Canada Education Savings Grant (CESG) can add up to $500 per year, $7,200 lifetime.
• TFSA. The Tax-Free Savings Account allows you to earn tax-free investment income on contributions of up to $5,000 annually. Withdrawals are tax-free, too.
• RSP. By maximizing your RSP contribution each year, you not only save more for your retirement, you also reduce your taxable earnings
Throughout your working years, you may receive windfalls, such as employment bonuses, salary increases, tax refunds or inheritances. While it can be tempting to spend this “found money” right away, by investing it, increasing your RSP contribution, or paying down debt, it will work harder for you and produce a greater benefit down the road.
3. Use windfalls wisely
Throughout your working years, you may receive windfalls, such as employment bonuses, salary increases, tax refunds or inheritances. While it can be tempting to spend this “found money” right away, by investing it, increasing your RSP contribution, or paying down debt, it will work harder for you and produce a greater benefit down the road.
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