Do you like going to restaurants, going on trips or spoiling your loved ones? When you retire, you will still want to do so! You may wish to carry out many projects, such as going back to school or traveling. If you have ambitious projects or expensive hobbies, you should take this into account and financially plan your retirement accordingly!

Examples of retirement plans

 

Geraldine
spends her winters in an upscale apartment in Florida.
$20 000

 

Mary
lives for her grandchildren and spoils them a lot.
$3000

 

Walid
decided to enroll in a course at university.
$500

 

Suzanne and Jack
have found a camping car and plan to drive across the country.
$200 000

 

Margaret
enjoys painting and knitting.
$2000

 

Paul
is an avid outdoorsman and goes on a trip every year.
$10 000

You must establish the income you will need to carry out the retirement plan of your dreams or simply to maintain your standards of living once you retire.

To maintain his or her standard of living in retirement, a person will need around 70% of his or her average gross annual income from his or her last years of work, which are usually the years when the salary was highest. Depending on the age at which you wish to retire, your needs and your retirement plan, this percentage may be reviewed. For example, people who want to retire early and enjoy a long retirement should anticipate that they will need to save more.

Make a personal budget. You will be able to determine your capacity to save.

In order to accumulate the amounts that will allow you to ensure the income you will need once you retire, you will have to set savings goals. If you have a good savings capacity, it is recommended that you save around 10% of your annual net income.

To properly evaluate your situation, use SimulR. This simulator tool will help you:

• determine the various sources of retirement income;
• estimate of the amounts to which you could be entitled;
• set your savings goals for retirement.

 

Good advice
Please note that it is generally better to reduce or eliminate your debts before you start saving, especially when interest rates are high. Make sure you have an emergency fund for unforeseen events, and then think about saving for your projects and your retirement. Regularly review your budget and adjust your savings amount according to your current financial situation.

Here are five tips to help you achieve your goals and guide you easily regarding financial planning:

1. Start saving as soon as possible. Time is on your side, don't waste it!
2. Don't save blindly. Plan your savings according to your situation and your goals. If you feel the need, do not hesitate to be accompanied by a financial planner.
3. Choose registered investment vehicles. In the long term, investment made to registered investments such as an RRSP or TFSA deliver greater returns because of their tax benefits. It is important to choose the vehicle (RRSP or TFSA) most appropriate to your fiscal situation.
4. Find out to what you will be entitled. Regularly consult your Statement of Participation under the Québec Pension Plan (QPP) in My Account and find out about this plan for the terms and conditions. If you contribute to a pension plan offered by your employer, make sure you are familiar with its provisions. If you are a member of a private-sector pension plan, find out about this plan, check with your employer and remember to retrieve your Statement of Participation available in My Account. This Statement provides a wealth of information for you.

5. Take into account the various financial risks related to retirement. The increase in the cost of living, the longevity risk and the other financial risks must be taken into consideration when planning your retirement. You could be retired longer than you think and the cost of goods and services will not be the same as today.

 

Good advice
Please note that, if planning your retirement befuddles or intimidates you, specialists are there to help, especially in the event of a difficult economic situation. Meet with a financial planner to guide you through your finances.

Financial planning for retirement does not end when you approach retirement. You must plan your withdrawal strategy. It will allow you to make sure you make the best decisions regarding the withdrawal of your investments, the age at which you should apply for your retirement pension under the QPP, your Old Age Security pension or your benefits under a pension plan offered by your employer. This will allow you to maximize your income and reduce financial risks as much as possible during your retirement.

If you are retired, it is important to review your withdrawal strategy in times of recession or tougher economic times.

 

Good advice
Evaluate your financial situation regularly, especially if your personal situation changes. You can thus ensure that your retirement project and plan are in synch with your situation.