Why you need to plan for retirement earlier than you think

by | Jun 21, 2023 | Financial Tips | 0 comments

For many people, retirement can be an afterthought. Maybe you’re putting a little money away in an RRSP, maybe you aren’t. Maybe your focus is on saving for a house, or paying for your children’s education. While all of those things are important, when planning for a financially secure future, you need to start early.

Here at ACN Financial Group, we help people plan for their retirement and other savings goals. In this article, we’d like to share some tips from our friends at Manulife Solutions Magazine, to help you start thinking about your retirement goals.

Make a plan

The first tip from Manulife is to make sure you have a plan for retirement, and to plan early. For many people, nearing retirement can be accompanied by increased worry and anxiety about financial uncertainty. Having a plan can help ease that stress as retirement comes closer. A plan will also help you discuss how to achieve your goals more specifically with your financial advisor.

According to a 2022 survey cited in this article, of Canadians who were retired or within 10 years of retirement, “only 33 per cent said they were in great shape financially. On average, retirees had started saving specifically for retirement at age 37 but wished they’d begun nearly a decade earlier.”

Contribute early and often

If you’re focused on saving for a house, you may not feel you need to prioritize retirement right now. However, even with alternative goals, Manulife encourages contributing what you can, when you can. This way you can benefit from the longest period of growth possible. 

There are many ways to start contributing even small amounts into retirement. One of these ways is through an employee-sponsored group benefit plan while you’re working, or an individual policy. You can use the health savings made through these plans to go towards your retirement plan. For information about group health benefits vs. individual policies, read our blog here.

Building a retirement nest egg

Manulife says in their article that the average amount you should aim to save for is between 70 to 80 per cent of your pre-retirement peak income. They have a helpful table to illustrate the benefit of contributing to this nest egg early.

What plan is right for you?

When considering retirement savings, the most common practice would be to utilize registered plans. These could include a Registered Retirement Savings Plan (RRSP), a Registered Pension Plan (RPP), or Tax-Free Savings Account (TFSA) to name a few. 

It’s important to discuss your risk tolerance with a financial advisor to make sure you’re comfortable with where your money is going as you plan for retirement. You may choose to take investments with more risk in your 30s and shift to more secure investments as you near retirement.

For more information on retirement income, the benefits/risks of home equity and more, read the full article here. And don’t hesitate to contact us here at ACN Financial Group if you’d like to discuss retirement plans and how to set your family up for a secure financial future.