September 04, 2019 | By: Sandra Sherk

Not Your Momma's Guide to Retirement Planning


Are you someone who wants to retire at 55 or someone who wants to be carried out on a stretcher? We may all be different in what we want for our future, but we all need to plan for that future. People retirement planning today will see a different picture than what their parents did some years ago. So here’s how to start preparing for retirement in this day and age.

Where Did the Savings Go?

Due to low interest rates, today’s savings aren’t growing like they did in the past. I remember having a Canada Savings Bond that was given to me by my grandparents when I was a young teenager. Thanks to the interest rates of the time, it doubled in value in just 7 years. That isn’t happening today. As well, fewer companies are offering retirement pensions to their employees. 

If you retire and then find you need more money, getting back into the workforce can be difficult. As well, you shouldn’t go into retirement with credit card debt or other high interest debt. We need to be aware of our financial needs in retirement and we need to start planning as early as we can for them. The following tips will assist you as you prepare for those “Golden Years”.

Set Your Retirement Goals

How do you picture your retirement life? Do you want to travel? Do you want to pursue different hobbies? Do you want to move to Arizona? It’s important to have an idea of what you plan on doing, so then you can establish a realistic plan that will allow you to meet these financial goals. Or perhaps you may have to adjust your goals to meet your financial abilities.

Know Your Current Financial Commitments

Your financial circumstances today will affect your future years. Are you supporting others? Are you carrying debt? You may be handling these commitments now, but what will happen when your income decreases when you retire? If these costs carry into your retirement, they will impact the funds you have to spend on your retirement goals. Now is the time to start preparing to cut these expenses.

Get an Idea of Your Potential Retirement Income

The Financial Consumer Agency of Canada (FCAC) has a Retirement Income Calculator that helps estimate how much retirement income you may have. It takes about 30 minutes to use the calculator, but isn’t your future worth the effort now? Many people over estimate their retirement income and then run into surprises when they finally do retire.

Develop and Follow a Budget Before and During Retirement

It’s important to have a budget plan for every stage of your life. (Tip: If you don’t like the “B” word, then call it a spending plan.) You should have a budget or spending plan for the present, which is your current situation, but you can also prepare a spending plan for the future. If putting one together stresses you out, check out Credit Canada’s Monthly Budget Planner. It’s a simple worksheet where all you have to do is plug in your net income/take home pay and monthly expenses and then the Planner tells you how much money you have left over after taking care of all your expenses. It also conveniently tells you how much of your income is going towards housing, living expenses, personal expenses, and work expenses.

Having and following a budget will help you live within your means, meet your expenses and have funds to meet your goals. It also gives you control. If you’re not sure how much money you spend or on what, take the time to track your expenses for one month using our Monthly Expense Tracker. Small changes in your spending add up and can help you achieve your goals.

Find Ways to Save Money when You Retire

Shoppers Drug Mart and Rexall Pharma Plus have Seniors Discount Day once a week—and who doesn’t like to save 20%? Most stores consider the senior age limit to be 65 and over, but I know the Shoppers location I go to considers 55 to be the new 65. Rexall also considers a senior to be 55 and older, so don’t be afraid to ask at any stores you frequent what the senior age limit is, and then if you make the cut, plan to shop on Seniors Day. Restaurants, movie theatres, etc. have special pricing for seniors, too. Banks also offer low or no-fee plans for seniors, so don’t be embarrassed and ask what the senior age is.

Don’t Take High-Interest Debt into Retirement

Be aware of your debt load. If you owe $7,500 on a credit card with a 19.99% interest rate and only pay the minimum payment of $150, it will take you over 9 years to pay off that debt and cost you $8,746 in interest. But if you increased that payment to $250 per month, you can repay the debt in 3.5 years. Or let's say you owe $7,500 on a payday loan at an interest rate of 43.93%. If you were to make monthly payments of $300 every single month, it will take you more than 8 years to repay and cost you $22,244 in interest! By increasing your payment to $500, you can reduce the repayment time to 2 years and save a lot in interest. Better yet, speak with you bank or credit union and see if you qualify for a debt consolidation loan. Their interest rate will be less and you will be able to repay the loan a lot quicker. Use our Debt Calculator to see how fast you can pay off your debt using different debt relief options and save the most money.

Set Up an Emergency Fund for Unexpected Health Issues and Major Purchases

Unfortunately, we don’t know what the future holds for us, so it’s important to plan for the unexpected. If your appliances are getting older, you need to be ready to replace them. Health issues could lead to increased expenses, too. It’s also a good time to review your insurance policies to ensure they meet your current and future needs.

Start Saving as Early as You Can

The compounding growth will help your money grow. TFSAs and RRSPs are only two examples of tools that can help you save for the future. If you start saving as soon as you start working, your money will grow, even if you have to decrease your rate of savings later on due the family years and extra costs. Also be aware of free money if your employer offers a matching RRSP program. It’s definitely worth a little “belt tightening” to be able to take advantage of this.

Contact Credit Canada for free budgeting advice and debt help

You need to plan for your future because it's going to happen whether you're ready or not. You may have to say NO to others, but your future is definitely worth it, and no one can plan it for you but you. To get help with budgeting, money management or dealing with your debt, give us a call at 1.800.267.2272 to arrange a confidential appointment with one of our certified Credit Counsellors. And start planning for your golden years today!



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