Tips on Retirement Savings Plan

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A retirement savings plan is a way of protecting your post-retirement financial lifestyle.  However, in recent times, recessions, stock-market declines, housing market bubbles, joblessness, and most recently, a global pandemic have created a series of challenges for people trying to start, grow, or maintain a retirement savings plan.  With all the economic uncertainties, it’s natural to wonder if you’re doing all you can to protect your retirement nest egg.  Taking a back to basics approach can instruct you on how to keep your retirement financial plan on track during uncertain economic times and beyond.

Consider these tried and tested tips that most financial advisors will recommend for a secure and enjoyable retirement.

  •   Make Realistic Budget and Lifestyle

Determining your retirement income needs starts with making realistic assumptions about your future.  Because of increased life expectancy, retirement years are longer than they used to be.  The average life expectancy for Canadians is between 78-79 years.  Longevity can also be impacted by genetics, where you live, your marital status, and your lifestyle.  All of these factors into how you plan for your retirement.  It’s also good to be realistic about your post-retirement budget and lifestyle.  Do not make the mistake of assuming that your post-retirement budget will be reduced.  Retirement is becoming increasingly expensive, particularly in the first few years.  It’s essential to have a plan to help mitigate expenses when you are no longer earning a paycheck

  •   Have A Savings Plan

Based on these realistic lifestyle assumptions about your post-retirement days, you can begin to determine what you can do now to sustain yourself financially for at least 25 years post-retirement.  The 4% rule is one popular method for working this out.  In this model, you commit 4% of your savings for every year of retirement.  Another approach is to draw down 2-3% of your total retirement portfolio annually, adjusted yearly for inflation.

  •   Consider Inflation

Speaking of inflation, failing to factor it into your plan could take a substantial bite out of your hard-earned nest egg.  Inflation impacts how much your retirement savings will be worth over time, so understanding this is critical to ensuring that you have enough assets to last throughout your retirement.

  •   Grow Your Retirement Savings

Retirement means different things to different people, but the key is to enjoy this time of your life while making sure you don’t outlive your retirement savings.  You are more likely to achieve this with a thoughtfully developed plan that allows you to withdraw money from your portfolio while enabling growth over the long term.  You can achieve this by using various investment vehicles with reasonable returns.

Bottom Line

Planning for the future is a complex and sometimes emotional process that is not easy to do without guidance.   If you would like to have a personal consultation, please contact Winnie at winnie@leoganda.com for an appointment.

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Disclaimer

This information is designed to educate and inform you of financial strategies and products currently available. As each individual’s circumstances differ, it is important to review the suitability of these concepts for your particular needs with a Qualified Financial Advisor.