How to plan for retirement is something we all should think about no matter what stage you are in your career. The majority of our younger population don’t think about it and the older population may not have a plan in place. Who wouldn’t want to retire at least “on time” at the age of 65 or even earlier. Unfortunately, if you don’t act now, you may have to work past 65. The government of Canada has recently increase the age of when they provide the Canada Pension Plan (CPP) to retirees, from 65 to 67 years old. The Provincial Pension Plan allows you to retire as early as 60 years old. Here’s how to plan for retirement at any age:
Desired retirement income
Determine how much income you would like to have when you retire. If you currently make $50,000 a year employed, would you like to have the same at retirement or could you live off of less? What’s comfortable for you?
Desired age of retirement
How old do you want to be when you retire. The magic number is 65 years old for most people but anyone can retire at anytime. You can retire now if you’d like but you need enough money to live for the rest of your life.
Estimate life expectancy
The average life expectancy in Canada is 80.7 years and 78.3 in the United States according to Wikipedia. This doesn’t mean you’ll live until that age. You have to base your retirement plan on how long you expect to live and how many years you want to generate income. Since your life expectancy is unpredictable, always plan and readjust your budget.
It really boils down to how much you spend when you are retired and the type of lifestyle you plan to have. You’ll obviously need money traveling the world or you can just live simple on minimal income.
Sources of income
There are many streams of income upon retirement, some have more than others. Examples include retirement funds, investments and assets.
Everyone’s financial retirement need is unique. You can’t fixate your plan on what others are doing only because everyone’s expenses and lifestyles are different. Have a plan based on your sources of retirement income and your financial needs.
Retirement, planning, savings