Going into retirement is a special moment in your life. With proper planning, you will have enough money to move smoothly from work life to an enjoyable retirement. Here are 9 retirement planning tips to get you ready for those golden years.
1. Know your magic number
Did you know that only 47% of Canadians say they know how much they need to save to maintain their standard of living in retirement?*
It’s important to find out how much money you need to live comfortably in retirement This is your financial independence number. While there's no hard number for retirement savings, so much will depend on your personal spending habits and lifestyle goals.
The number might turn out to be far larger than you anticipated. That’s more of a reason why you should quickly be working towards that target. Your Scotia advisor can help you with the calculation.
It all starts with a budget. This is simply comparing your available income with your estimated needs. Surprisingly, only 49% of Canadians report having a budget.**
Your budget in retirement will be far different from your budget while working. Remember that when you retire, you stop working, which means that your income also stops. Managing the transition from getting that steady paycheque to adjusting to a more limited retirement income will be initially challenging. But with proper planning and budgeting, you can be retirement ready.
3. Pay off your debts
According to Statistics Canada, 1 in 3 retirees hold some form of debt. Try to pay off most of your debts while you are still actively working. You don’t want to go into retirement with large debts and high-interest credit card balances.
4. Don’t jump into retirement — ease into it
Practice retirement even before retiring. You can test the waters by slowly reducing your working hours or taking a sabbatical or a few months off before your actual retirement date. This way you can get acquainted with the feeling of life after work.
5. Learn about discounts and tax credits
Make sure you take advantage of all the discounts offered to seniors by insurance companies, travel agencies, and various stores. You may also be able to use your tax credits to lower your taxes. Find out about key tax credits and other options available to older Canadians.
6. Remember to sign up for government benefits
You are entitled to several government benefits, such as Canada Pension Plan (CPP), Old Age Security (OAS), or the Guaranteed Income Supplement (GIS). Make sure you have applied to all the available government benefits.
7. Find new routines
Work gives you a sense of purpose, identity, and a healthy routine. The sudden loss of that routine and the social connections that come with it can create some emotional strain. It’s essential to replace work routines with new activities. You will find this highly beneficial both physically and mentally.
8. Celebrate your retirement
Retirement is a significant milestone that deserves to be celebrated. You can treat yourself to a special gift or an adventurous trip you’ve always wanted. Or you can simply have a dinner or coffee outing with friends. That way you are making the moment special and memorable.
9. Meet an advisor
One common misconception among Canadians is that they require a minimum amount of money saved before meeting with a financial advisor. This is not true. Anyone can meet with a Scotiabank advisor and receive advice from a trusted source, whose goal is to get you ready for retirement.
With smart planning and advice, the retirement of your dreams might be closer than you think.