Retirement planning
Are you ready to retire? How much money do you think you will need? Or do you still have another 20 years or more before retirement? According to the experts, it's never too early to start making retirement plans.
Barbara Hawkins, long-time writer for MoneySense magazine, recommends 6 steps to a wealthy retirement.
1. Create a "must-have" list. Estimate how much you spend in all areas and then deduct things that you will no longer have to pay such as child care costs. You should also deduct luxuries you can do without such as a second car, as well as items that you will no longer need to purchase such as work clothes and the cost of commuting.
2. Next, Hawkins says you should create a "nice-to-have" list containing things such as a special vacation. Keep things within reason.
3. Then, remember that you can count on the government. Hawkins says that despite what fearmongers say, the Canada Pension Plan and Old Age security are in fine shape.
4. Some people are lucky enough to have a defined benefit pension others have RRSPs to which they have been contributing. These things need to be considered when calculating your overall wealth.
5. Make sure your porfolio is diversified, Hawkins says, by having 30%-50% of your assets in various fixed-income investments such as GIC's and the remainder in a wide variety of stocks from Canada and other countries. There are no guarantees, though, since markets are volatile and you may end up retiring right when markets can'take a plunge like they did in 2008.
6. Finally, Hawkins recommends treating your "must-have" list and your "nice-to-have" list differently. The "must-have" portion should represent a 4% withdrawal rate from your portfolio while your "nice-to-have" portion could be treated with more freedom, in particular in the early years of your retirement when you have your health and are more active. Keeping these two portions separate within your portfolio will ensure that your "must-have" needs are well-covered later on in your retirement.
Planning for retirement may be time-consuming but it will literally pay off in the end making your golden years truly golden.
Here are some great books to help you start your on retirement planning:
2 thoughts on “Retirement planning”
Thanks for the post. Retirement has been on my mind a lot lately. Not because I’m approaching that age but because my paren’ts are. So thanks for the info.
Thanks for the feedback. Glad to know this post was useful!