Tricks to managing your pre-retirement assets
(NC) If you're like most Canadians these days, your internal monologue goes something like this: Retirement is still years away, I've got lots of time to think about it. Perhaps you do when it's more than 10 years away. Besides, there are other priorities to worry about like the house, the kids' education, your parents' well-being. And considering the current economic climate and the markets' never-ending erratic behaviour, you're just managing, right? Your current lifestyle doesn't allow you to save the kind of money necessary for retirement. But, how much would you need to save anyway? It all sounds so scary. But it doesn't have to be if you start taking the right steps now which could really pay off in the long run. According to the retirement experts at Desjardins Insurance, all it takes is a simple — yet effective — wealth management plan.
The first step — and this cannot be stressed enough — is to know where all your hard-earned money is going. The way you do this is by establishing a budget that shows exactly how your income is divided between expenses (i.e. rent, food, loan repayments, etc.). And remember: it's always best to pay off your debts with the highest interest first. If you already save a little bit for vacations and emergencies, doing this exercise should also help you free up some extra money for your retirement savings.
Establish your retirement savings strategy — Thisrelatively simple process will help you to identify your sources of retirement income.
• Do you have a group pension plan through your work?
• Are you going to go into semi-retirement by working part-time?
• Will you have an old age security and/or a government pension plan?
According to the experts, government plans cover at best 40% of the retirement income you'll need to maintain your lifestyle after you stop working. Therefore, you need to start saving now. Here are four basic steps to get started:
• Define your retirement objectives and determine what you have to do financially to achieve them
• Identify your sources of retirement income and how much you'll need to supplement them
• Identify your investor profile and choose the types of investments that match your objectives and your level of risk tolerance
• Review the elements of your strategy once a year and adjust accordingly
With your plan in place, start saving right away with automatic transfers to your savings account that you can set up with your financial institution or employer. This will allow you to take advantage of compound interest and long-term performance growth.
For wealth management advice about setting up your retirement plan, speak to your financial advisor. Or for more immediate answers, visit the Thinking about your retirement section of the Desjardins Insurance website at www.desjardinslifeinsurance.com.
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