Many Canadians worry about whether they will be able to retire comfortably and maintain the lifestyle they want. With inflation on the rise and the disappearance of regular pension plans, it’s important now more than ever to have a detailed retirement plan.
Providing advice on this very matter is Canadian financial planner, Ed Rempel. Rempel is a well-known financial planner with an acclaimed blog where he covers a myriad of topics regarding finances – including how to retire with the lifestyle you want.
“Many people have bought into the idea that retirement is out of their reach due to inflation and shifts in the work force,” explains Rempel. “However, with some careful planning, retirement is possible depending on the lifestyle you’re looking to live.”
So, what’s required to retire with the lifestyle you want? Let’s explore that idea.
1: Start planning early
The earlier you begin planning for your retirement, the better off you’ll be. Even if you’re in your 20s or 30s, it’s never too early to start saving and investing for your retirement. By starting early, you can take advantage of compound growth, which allows your investments to grow over time, which is how you beat inflation. You may also want to consider consulting with a financial planner who can help you create a retirement plan that meets your specific needs.
“Getting that expert opinion and having someone draft a proper plan for you can really help you map out your goals and keep you on track,” says Rempel. “I’ve developed hundreds of plans for Canadian families and I can tell you having clear set goals is very beneficial.”
“You’ve got to be very careful if you don’t know where you are going, because you might not get there.” – Yogi Berra
2: Consider your income streams
When planning for retirement, it’s important to consider your sources of income. This may include your pension, government benefits (such as Old Age Security and the Canada Pension Plan), and any personal savings or investments. You’ll want to estimate how much income you’ll have in retirement and compare it to your desired lifestyle expenses. Of course, this can change over time, so every year or so, you should adjust your financial plan to reflect your current situation.
3. Create a detailed Desired Lifestyle Goal
To maintain the lifestyle you want in retirement, you’ll need to create a detailed desired lifestyle goal that takes into account your sources of income and your expenses. This will help you determine how much you can spend on things like travel, hobbies, and entertainment while still having enough to cover your basic living expenses.
4. Learn to have a higher risk tolerance
It is difficult to retire comfortably with a modest return from a balanced portfolio. Almost all Canadians will the higher return of equities to retire with the lifestyle they want. You can learn to have a higher risk tolerance by getting educated on stock market history and getting experience staying invested through market declines and recoveries.
5. Stay Active and Engaged
Finally, it’s important to stay active and engaged in retirement. This can help you maintain good physical and mental health, which can be important as you age. Consider taking up new hobbies, volunteering, or joining social clubs or organizations to stay engaged with your community.
Retirement can be a wonderful time in your life, but it requires careful planning to ensure that you can retire with the lifestyle you want. By starting early, considering your sources of income, creating a budget, planning for healthcare costs, learning to have a higher risk tolerance, and staying active and engaged, you can help ensure a comfortable and fulfilling retirement in Canada.