February 13, 2014 | By: Roxanne Ramedani

The R word.

Retirement means very different things to different people. Some might see it as an opportunity to finally indulge with their new found freedom, spend endless hours with family members and friends, some might find themselves travelling across the world and relaxing on sandy beaches far far away, while others may want to start that side venture they’ve always talked about, volunteer at a local charity or even open up a small business of their own. Depending on what stage of your career you’re in and what you’re goals are, retirement can mean anything. The one thing that we can all agree on is that retirement is a goal and everyone is different. You have to ask yourself, “When I think of my retirement what do I see and what will I do to make it a reality?”

Thanks to my financial savvy mother I might be one of the few Canadians who is not going to rely solely on CPP for my retirement. At 18 and merely days after getting my first job she practically forced me to start saving for my future and in doing so I had to create a solid financial plan for myself. At the time I did not realize just how important it would become to save a little here and there; but after a few years in the real world and living on my own I realized that while the cost of living is rising and our personal budgets are not being adjusted and saving for retirement is a must!

A recent study by BMO found that almost one-third of Canadians plan to rely 'heavily' on the CPP/QPP, despite the fact that the average CPP payout is less than $600 a month.  While thirty-four per cent are hoping to win the lottery to come up with the money they need for their retirement years. As much as I’d love to think receiving less than $600 a month would suffice or that I have a chance at winning the lotto, the truth is, relying on CPP or the Lotto aren’t really practical financial goals. I took to Facebook to get some honest insight on how Canadians felt about their retirement. The responses were pretty accurate to BMO’s findings. Most of the younger generation was not even aware that CPP is on average less than $600 a month, and those who did know the figures were so deep in debt that they preferred focusing on a debt repayment program than retirement savings at this point in their life. Some questioned whether CPP would even be around for their retirement. A few who had been contributing said they wished they started earlier and that they may need to take on a part time job after retirement and  there were many  who literally said they had no idea what they planned on doing after retirement in terms of an income solution. Scary isn’t it?

I often think to myself what would happen if I saved for my retirement but my parents hadn’t? The unfortunate truth is a lot of Canadians don’t think about saving for their retirement and a lot of those who have started their financial planning with retirement factored in may have parents who are now growing older and may soon need more care and financial support because they have not saved for their own retirement.  This is why it’s important to start thinking about retirement now because for some, retirement is not just about their own life anymore but it’s also about being able to take care of their family too. Canadians should view CPP as supplementary component of their overall retirement income solution. Our focus should be more on saving regularly and contributing to personal pension plans like RRSPs, regardless of your goals.

I’ve come up with 5 easy steps to make retirement saving easier and to get the ball rolling on your retirement financial planning if you haven’t started yet!

1. Start thinking about your retirement. It doesn’t matter what stage of your life you’re in and it’s never too late or too early to take control of your finances and set financial goals. Ask yourself, “What does retirement mean to you?”

2. Aim to reduce your debt. A great way to start setting retirement goals is by attending financial planning counselling sessions. I can’t stress how important it is making a budget whether it’s a daily budget, monthly budget, annual budget or just learning new budget tips to keep you going.

3. Organizing your finances is a huge step in setting solid financial goals and understanding the true potential of your finances.  You don’t need to be an expert to save money and it’s okay to get a second opinion from experts.

4. Take advantage of tax-free accounts:  Whether you chose an RRSP that defers tax or a TFSA that earns tax free income, open up an account and take advantage of them.

5. Start saving. Review your budget and save according to your needs and goals. Believe me a little goes a long way thanks to time and compound interest growth.


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