Original Posting from
FaithLife Newsletter
It’s never too late to make adjustments to spending and saving habits in order to protect your future.
A lack of money and time are given as the top two reasons for not saving much for retirement. Proverbs 21:5 says, “The plans of the diligent lead surely to advantage, but everyone who is hasty comes surely to poverty.” It’s never too late to make adjustments to your spending and saving plan in order to protect your future – ensuring a safe landing into retirement.
20 years from retirement
If you have children, the 20 years from retirement time period could look very different, depending on whether or not you are saving for their education. If you had your children in your 20’s, you may be and “empty nester” who is looking to spend some money on yourself. As you get closer to retirement, you may have a better sense of what you want to do in retirement and how much it will cost for you to get there. This is a crucial time for you to adjust spending and saving habits with a view on the future!
If you have a little to save:
• Put away what you can. Even if it’s only $100 a month, this is a good habit to maintain and you’ll be surprised at how quickly your money can grow.
• Set clear guidelines for what you can afford to pay for your children’s education. Create a plan with your children before they get to college/university age.
If you have a moderate amount to save:
• Avoid “midlife crisis” splurging.
• Stick to your budget – especially for those big ticket items like a vehicle.
• Consult with a financial representative to make sure you are receiving the best after-tax returns on any investments.
• Consider purchasing permanent life insurance.
If you have a lot to save:
• Make additional “catch-up” contributions to your RRSP.
• Guard against “lifestyle creep” where you become accustomed to living the “good life”. Higher expenses will quickly eat up your income for retirement.
10 years from retirement
This decade is when you really focus on saving for retirement. It’s possible that as much as 80% of retirement savings get set aside during this time. Generally by this time, you should be increasing savings rates and eliminating debts.
If you have a little to save:
• You may have to consider working a few years beyond age 65. This will give you a chance to boost monthly Government benefits, build up your RRSP account and reduce the period you’ll have to rely on retirement assets.
• You may have figured out how to live on less, but don’t stop saving for retirement – or don’t give up if you haven’t started. Any little bit saved will help!
If you have a moderate amount to save:
• Pay off all outstanding debts.
• Consider making a “catch-up” contribution to your RRSPs.
• Become more conservative with and protective of your savings and investments.
• Purchase long-term care insurance to help ensure a nursing home stay doesn’t deplete your assets.
If you have a lot to save:
• Consult a legal advisor to make sure your estate plans are set up and are flexible enough to withstand tax law changes.
• Speak with your financial representative about investments in addition to RRSPs and TFSAs.
• Consider leaving a legacy gift.
We know that most Canadians are not saving enough money for their retirement because $149,200 is the amount that the average baby boomer, aged 60 to 62 with an RRSP plan, has saved for retirement.
Although a lack of time is a top reason that people give for not planning for retirement, do not be discouraged – there is still time. You can start by adjusting spending and saving habits immediately. You will be pleasantly surprised at how quickly your savings will add up so that you can land safely and confidently into retirement.
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