Six Steps to Retirement Planning

Retirement Planning is a process of building financial resources to support your post-working lifestyle. It involves creating a long-term plan that helps you determine how much money you need to save for your retirement and implementing strategies to maximize your savings.

Start Early

It’s important to begin saving for Retirement Planning in Toronto as early as possible. Whether it’s $25 per month in your 20s or the maximum allowable by your employer, making sure you are saving enough will go a long way to ensure you have a comfortable retirement. It also gives you a sense of accomplishment and satisfaction in knowing that your hard work will pay off later on.

Invest Right

Investments are a great way to build your retirement nest egg. They can provide both income and growth, and they should be diversified so you don’t lose too much of your principal when one or more investments fall in value.

Use a mix of stocks, bonds and other investments that fit your risk tolerance, investment time horizon and liquidity needs. Your advisor can help you decide the right mix for your goals and circumstances.

Get Real About Your Retirement Goals

Once you’ve established the kind of retirement lifestyle you want, take a look at your current expenses to see what you need to cover them. This will help you figure out what your income will be, how much you need to save and where to invest your savings.

Set a Budget and Stick to It

The first step is to create a budget that shows you how much money you will need in retirement. This is a crucial step because it gives you a clear picture of what your spending will be in the years to come. Using a budget will allow you to identify any unnecessary expenses that you can eliminate or cut back on.

Set up automatic deductions to ensure you’re on track to reach your goals. Having a system in place that automatically takes money out of your checking account to fund your retirement accounts will make it easier to stay on top of your savings and avoid overspending or letting your savings fall behind.

Start Your Plan Today

The sooner you start your retirement plan, the more you can save and the more you can invest. Begin by putting away money into your 401(k) or other employer-sponsored retirement account as soon as you are eligible, if you have one. If you don’t have one, talk with your employer or a financial planner about opening a plan.

Dream About Your Retirement Life

You may have spent your entire working life thinking about what your retirement would be like. Maybe you’ve always wanted to travel the world, volunteer or become a professional grandparent. Whatever it is, taking the time to envision your retirement now will give you a head start and help you create a budget that will allow you to reach your dreams.

Think about how your expenses will change in retirement, including what types of services you will need and how much you can afford to spend. Typically, people need to replace about 70% to 90% of their pre-retirement income in order to maintain the same standard of living they had before retirement.

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