For many Canadians, retirement seems like a long way off – especially at the peak of a successful career. With the arrival of better health care, longer life spans, and news of the retirement age increasing it may very well be that the end of your work life is a fair distance away. However, it’s never too early to start the retirement planning process. Whether you’re 45 or 65 it’s important to be prepared for your retirement years. Here are 3 tips to help you get started:
1. Make Budget Plans
How much are you worth? Before implementing a retirement plan be sure to calculate your net worth and find out where you stand in terms of what you own and what you owe. Ideally, your assets should be worth more than your debts. Map out your monthly living expenses and determine where your funds are being spent, from there prioritize your debts starting with the most essential to pay off. Remember that to maintain the lifestyle you currently have you will need 70-80% of your present income after you retire. Creating a written plan will help you see where your funds are going and where they should go in the future.
2. Manage Your Mortgage
Owning your home gives you a significant advantage when it comes to planning your retirement. With each monthly payment you are building equity and, if you align your payoff date with your retirement, decreasing your need for cash flow post-retirement. If your interest rates start to fall, you might want to think about refinancing your mortgage. Make it a goal to pay off your mortgage completely by the time you’re retired, saving yourself the monthly expense of hundreds of dollars will be a big relief for both your bank account and peace of mind.
3. Think Long-Term
Now is the time to be taking into consideration how you want to spend your retirement. What kind of lifestyle do you see yourself living? Will you be traveling? Moving up North? Spending more time with the grandkids? Once the career life is over, you get to reap the benefits of your savings by beginning the life you’ve always dreamed of. Make a list of categories that outline your plans and list all of the expenses involved along with a maximum budget goal.