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Retirement savings

January 15, 2018

7 top retirement tips for 2018

Ready to say farewell to your workaday life and hello to those long-awaited golden years? A little planning can help you make your dreams a reality.

Retirement opens up a seemingly limitless world of possibilities. But all those choices can be a bit intimidating.

The good news is with a bit of care, forethought and preparation, you can not only plot out a successful, fulfilling retirement, but also ensure you’ll have the funds on hand to pay for it.

The following 7 simple, practical tips can help you begin that journey:

1. Map your future

While you should definitely leave room in your plan for serendipity and adventure, creating a list of your priorities for your golden years can prove invaluable as you lay down a sturdy foundation for your retirement. What’s on your list? Exotic travel, starting a new part-time business, spending more time with friends and family, diving into a new hobby or signing up for a class on a topic in which you’ve long harboured an interest? Take some time to mull over what you really want to do with this tabula rasa. Be sure to encourage your partner, if you have one, to do the same and then look together for common ground as well as the places where there’s synergy between your separate wants and needs.

In short, if you want to map out your best possible future, it doesn’t hurt to have a decent idea of the desired destination.

2. Budget, budget, budget

Now that you have a more solid conception of what you want your retirement to look like, it’s time to crunch the numbers and establish a feasible budget. Get as detailed as possible. Include housing costs, rent, gas, hydro, food, transportation and any other expenses that come to mind. If you are considering downsizing your space to free up resources, keep an eye on the market and work with a real estate agent you trust to maximize the value of your move. Remember to factor in inflation costs (Canada’s average is about 2%). Some expenses, such as commuting or lunch costs, will disappear, so take those savings into account as well.

3. Pay off your debts

Do your best to pay off any debt while you’re still earning a regular income. Once that debt is gone, redirect those resources to your savings, investments and other long-term goals.

4. Max out your investments

Max out your retirement investments by putting as much as you can into your registered retirement savings plan (RRSP) and tax-free savings account (TFSA), then speak with your financial advisor about further options for growing your money that best suit your unique needs.

5. Seek out other potential sources of retirement income

Your RRSP, TFSA and employee pension plan need not be your only sources of retirement income. You may also be eligible for payments from Old Age Security (OAS), the Canada Pension Plan (CPP)/Quebec Pension Plan (QPP) and the Guaranteed Income Supplement (GIS), all of which supplement your retirement income. 

CPP and QPP provide monthly payments to those who contribute to it during their working years. The amount of those payments depends on how long you contributed and the age when you start withdrawing your CPP or QPP retirement pension (as early as 60). The older you are when you start receiving payments, the more per month you could potentially receive. Canadians over 65 may qualify for OAS, which does not require contributions to reap benefits, if they’ve lived in Canada long enough. The GIS is a monthly benefit for low-income Canadian OAS pension recipients.

Other income sources to consider include rental income and part-time work.

6. Get or stay healthy

You can minimize those aches, pains and potentially skyrocketing healthcare costs as you age by eating right, getting enough sleep, exercising and maintaining your general health. Don’t forget to look after your mental and emotional health, too – that’s always important, but especially key when making a significant transition. Talk with a doctor, dietician and physical trainer to get expert guidance so you can remain healthy and active or so you can take up an active lifestyle.

7. Set up a gradual transition process

Retirement is a watershed moment in your life and even if you’ve made plans, you might find yourself wondering what to do with all that new, free time. If that transition ultimately seems to be too abrupt, perhaps consider a move to working part-time with a gradual decrease in hours. You don’t want to work until you’re 80 out of pure fiscal necessity, but there’s no longer a hard-and-fast rule that says you have to retire at 65 if you still enjoy working.

Retirement, like most things in life, is what you make of it. A plan that gives you confidence and security as you move into that next phase of life may just be one of the greatest, most profound gifts you ever give yourself.

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