Even though you may feel like you’re still early in your career, it’s never too soon to start planning for retirement. You can’t work forever, and you likely don’t want to work into your golden years. That’s why preparing for retirement while you’re still working is essential.
Here are several ways to plan for retirement and secure your financial future.
Speak With a Tax Professional to See When You Can Retire
Creating a retirement timeline based on your current trajectory and savings with a tax professional is crucial. A tax professional or financial planner can help you know your retirement income options and when you can reasonably leave the workforce.
Know Your Retirement Income Options
Retired Canadians are usually eligible to receive an income from the Canadian Pension Plan (CPP) or Quebec Pension Plan (QPP), or Old Age Security (OAS). It’s essential to estimate how much you could earn and what age would be the best time to apply. Eligibility for the CPP begins at age 60, and OAS starts at 65.
You could also have money from your employer’s pension plan, RRSP account, and other investments. Regardless of where your retirement income is coming from, prepare an estimate of how much money you expect to come in from each source.
Figure Out a Retirement Plan
People often make significant lifestyle changes when they retire. Many choose to downsize their homes, find new work, take on hobbies, or move to an entirely new climate. Your retirement options are only limited by your imagination and, to some extent, your wallet.
Consider what life changes would suit your preferred lifestyle and financial goals for your golden years. You might find that downgrading your current place or moving to a different part of the province could help you substantially save money, for example.
See If Your Employer Offers a Pension Plan
You will want to set yourself up if you have some sort of pension or retirement option where you work. The money will come directly off your paycheque, which may sting in the short term. However, remember that you’re doing this for your future self.
Having multiple income streams in retirement is generally better—that way, you’re not solely relying on the CPP.
Open an RRSP Account
Another source of retirement income is a Registered Retirement Savings Plan (RRSP). On top of the tax benefits that you receive from contributing to an RRSP, you can also secure your financial future. By making regular contributions to an RRSP, you’ll save on your current tax bill, and you can build a comfortable nest egg with the power of interest on your side.
Focus on Daily Financial Wins in the Short-Term
To save for retirement, you have to find ways to put away money in the short run so you’re always funding your retirement accounts. You can accumulate a decent amount over time by saving a little bit of money from every pay period.
Sometimes, unexpected circumstances pop up that make it hard to save consistently. If you’re struggling to pay bills between paycheques, Payactiv can help you access your earned wages* early so that you don’t have to dip into your savings or go into debt to get by.
