There’s no shortage of contradictory advice and studies when it comes to retirement planning. Depending on whom you talk to, we’re collectively saving too little, or perhaps too much, or just enough to make sure we live our final years in the manner we have become accustomed to or want.
Chances are, with Canada’s pension and old age benefits, you won’t starve from a lack of funds. But if you’ve always been poor, sorry, you will be in retirement, too, unless you’re getting a nice inheritance. If you’re rich, you’ll probably be okay in retirement, too. It’s the rest of us that worry about the future to point of obsession. About half of us even lie to family and friends about our retirement plan, says a BDO Canada Ltd. survey, and 52% of Canadians under the age of 30, when retirement planning should be well underway, don’t have an idea of how much they will need to save, according to a survey by Tangerine.
The good news is that 77% of retired Canadians are living the lifestyle they envisioned, Tangerine reports, and 90% of them were able to retire at the age they planned, with more than two-thirds of them finishing work between 55 and 64. The bad news is that only 34% of current workers expect to retire when they are that age and one in five expect to work into their 70s.
Unfortunately, even adding a corporate pension to your government retirement benefits may not be enough, says Crystal Wong, senior regional manager at TD Wealth Financial Planning, which is why it’s important to start saving early and have a diverse portfolio of investments.
Below is a primer from Wong to get you started on a life of leisure.
Pay yourself first
One easy way to build savings is to set up an automatic transfer of a set amount each month into a savings account. Setting aside money on a regular basis — whether it’s $20 a day, a week or every paycheque — adds up in the long term, particularly when those savings earn compound interest.
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