It’s Never Too Late to Save For Your Retirement
Some older Canadians have had financial challenges throughout their working lives which leave them with very little for retirement. Should this apply to you, your first step is to gather information to accurately take stock of your options. Don’t panic; instead, learn all you can about improving your situation.
Start by calculating your resources. Consider your assets such as savings, home equity you can borrow on, other assets you can liquidate, and employer pensions you might receive. Also estimate the value of your government pension payments. You need to know what money you can reasonably expect to live on. With this information, you will be in a good position to predict your future; and then take steps, right now, to improve it.
Get an estimate of what your Canada Pension Plan retirement benefit will be at age 60, or 65, or 70. Service Canada can provide you with a Statement of Contributions to help you decide the best age to begin collecting this money. A financial advisor can help you determine the right age to start your CPP income. Start early, you have less income but more time to spend it; start later, more income but less time.
The Old Age Security pension, available from the age of 65, is based on the length of time you have lived in Canada. You also need to know the projected amount of this payment.
A good budget will be important. Not just in terms of how you will live in retirement, but also to help identify where you can begin reducing expenses right now. You want to free up your cash flow. With it, you can pay off debt and ramp up your savings and investing activities, to enhance your future finances in every possible way.
For example, you can raise the deductible on your home insurance to lower your premiums. Discontinue a landline. Lower your cell phone plan. Maximize the efficiency of your home to reduce heating and cooling costs.
Do what you can to improve your cash flow. Then consider what investment strategies and insurance products will help you. It’s not about how much you have but about your net income after expenses.
You may think this is the time for aggressive investing. But it’s wiser to be conservative. There is no way to know if a cyclical downturn might happen just as you want to take money out for retirement income.
Accept that your future is looking far different than what you desired. Face this fact with determination, and then ask your Financial Advisor to help develop a wealth strategy that will improve your prospects.