We spend a large portion of our lives dreaming. Dreaming about going to high school graduation, dreaming about our first home and first car, dreaming about the perfect holidays, our wedding day, jobs, and…our retirement. Even at a young age, we’ve all said “when I retire, I’m going to…”. It’s just one of those things you think about early and think about often, as you should. While we aren’t trying to rush life, retirement comes up quicker than anyone expected and it’s important to start planning for retirement as early as possible.
If your retirement is something that you’re (not rushing) but looking forward to then it’s important to plan ahead. There are several things you should look at when you’re planning out the perfect retirement. Below we’ve shared some really important key factors that should play a big role in your planning process.
Deciding What Age to Retire
While you may not have it right down to the exact date, knowing what age you want to retire at is important in the planning process. If you want to retire at 55 and you’re already 40, then your plan is going to look a lot different from someone who wants to retire at 60 and is only 25. There is always time to start planning, it’s not too late. Think about your ideal retirement age and start planning accordingly.
What Does Your Retirement Look Like?
Do you see yourself in the same home surrounded by family and friends, living a low key retirement? Or do you see yourself in a beach hut in Fiji sipping Piña Coladas? Maybe buying an RV and touring North America is on the top of your retirement bucket list! Much like age, what you want to do when you retire is important to think about now. If you don’t plan on venturing far away from your current location, or you plan on selling your home and living in a small condo, your planning will differ. Obviously some retirement plans will require a larger amount of saving earlier on to be sustainable, while others may not necessarily need to save quite as much.
Early On, Look at Wants Vs Needs
Before going ahead and signing the papers on that brand new car with a $600 a month payment, consider thinking long-term. Could you save up the cash and buy a car with no monthly payment and contribute that $600 a month to your retirement savings account? Use tools like the compound interest calculator to see just how much money that car payment could get you in the long run. For example: consider a retirement savings fund with an initial $2000 contribution. You take that car payment of $600 per month and put it in this account with a 5.00% rate of return for 25 years. You could have $364,268.41 extra for retirement instead of a car payment for 8 years at the end of which, you need to incur another car payment.
Are You Going To Consider A Part Time Job?
Even though the point of retirement is to stop working, kick your feet up and enjoy your best years, it’s not for everyone. There are many people who still need a little something to keep active, even for a few hours a day and oftentimes that something is a part-time job. Maybe you love to garden so you want to have a few days a week working at the local greenhouse, or perhaps you want to fill a position at the library. When you’re planning for retirement, planning a post-retirement job will be an important thing to keep in mind. If you’re not the type to actually sit still and want to continue working, your plan will be greatly different from someone who wants to just lay back and enjoy their well earned time off. Even while collecting CPP (Canada Pension Plan) you are still able to work if you so choose. Keep in mind that if you continue working between the ages of 60-65, even though you’re collecting your Canada Pension you will also still have to contribute to it. However, between the ages of 65-70 you can choose to continue your contributions or you can choose to stop them while still working and still collecting.
A Top Notch Savings Plan
Of course, all of your retirement hopes and dreams come down to one thing….a really good savings plan. Most people who retire find that CPP alone isn’t enough income to live a comfortable retirement (especially if you want to be on the beach with a cocktail). The saving portion of your retirement plan is just as important (if not more) than the rest. If you’re a business owner and you don’t offer retirement savings plans for your employees, it might be a good time to take the leap. If you’re not a business owner and just want a really good savings plan for yourself, we suggest getting in touch with someone who knows retirement savings plans. Companies like BP Group Solutions can offer up the perfect plan for you or your employees. Start planning for your future right now and start by calling the team at BP Group Solutions in Cold Lake and Fort McMurray, Alberta. Our friendly and knowledgeable team is waiting to make all your retirement dreams come true!