How to plan for your retirement?

Once you reach your 50s, it’s natural to want to enjoy life and indulge a little after years of hard work. However, certain decisions can jeopardize your financial health, both now and in the future.

Here are our 6 financial tips to help you plan your retirement starting today:

1. Protect your most important asset
2. Plan for reduced income in retirement
3. Be proactive
4. Maximize your RRSP and TFSA contributions
5. Finish your current auto loan before buying a new vehicle
6. Pay for vacations in cash

Let’s take a detailed look at the above-mentioned tips to learn how to financially plan for retirement.

1. Protect your most important asset
   Even for those fortunate enough to have a solid pension plan, retirement income usually represents only 65% to 70% of your working income. While some work-related expenses disappear, there’s also a lot more free time! This is why it’s better to enter retirement free of consumer debt (credit cards, lines of credit, personal loans, etc.). Plan a repayment strategy to clear these debts before leaving the workforce, or even sooner if possible.
2. Plan for reduced income in retirement
   As insolvency experts, we specialize in solutions for managing debt. Thanks to our extensive experience, we can help you navigate the complexities of personal finances. For instance, we excel in preparing what we call a “preliminary budget.” This allows you to calculate your fixed expenses and estimate what your variable costs (food, clothing, pocket money) should look like. Each year, we create budgets for thousands of clients and can accurately estimate these expenses based on typical scenarios. We also guide you on tracking actual expenses and adjusting your budget to your personal situation. For more tips, check out our article, “Budget: Common mistakes to avoid.”
3. Be proactive
   After age 50, losing your job can have more lasting and significant consequences than at the age of 30. The job market can be unforgiving to older workers. Since finding a new job might take longer, it’s wise to build an emergency fund covering at least 3 months of income. Don’t forget that health issues and related work stoppages are also more likely as you age, so prepare accordingly.
4. Maximize your RRSP and TFSA contributions
   Haven’t started contributing to a Registered Retirement Savings Plan (RRSP) or Tax-Free Savings Account (TFSA) yet? While it’s better to start young, it’s never too late! In your 50s, your income is often higher than in your 30s. Plus, you may have recently paid off your car, your home, or seen your children leave the nest. Take this opportunity to invest more aggressively. By allocating a larger share of your income, you also save on taxes and grow your retirement savings.If you’ve already contributed but are facing financial difficulties, we recommend reading “I am having financial difficulties. Should I withdraw my RRSPs?”
5. Finish your current auto loan before buying a new vehicle
   Each year, dealerships come up with enticing offers to get us to trade in our cars. However, refinancing a vehicle when buying a new one always comes at a cost. Even if salespeople promise equal or lower payments, the financing term resets for another six or seven years. By keeping your current car, you’ll soon eliminate payments altogether. Better yet, you could set aside funds for future repairs!If you do need to purchase a vehicle, consider our tips in the article “Should you purchase or lease a vehicle?”
6. Pay for vacations in cash
   It’s hard to resist a sunny vacation in February or a trip to Europe in the summer. To avoid paying significantly more for your getaway, wait until you have enough savings instead of using your credit card. With interest rates nearing 20%, a $2,000 trip could end up costing nearly $3,000 if you only make minimum payments of 5% each month, and up to $4,000 if your minimum payment is just 3%. Five years later, your memories will have faded, but you’ll still be paying for the trip. Instead, set a vacation budget and save monthly so you can travel debt-free.To calculate the cost of a trip paid with your credit card, use our credit card cost calculator.

In conclusion, planning for retirement is a crucial step to ensure long-term security and peace of mind. By setting clear goals and adjusting your plan over time, you can fully enjoy your retirement. Starting early maximizes your chances for a stable and fulfilling retirement.

If, however, debt is preventing you from adequately planning for retirement, we encourage you to schedule a free consultation with the professionals at Jean Fortin & Associés for expert advice and tailored solutions.

By Pierre Fortin
Jean Fortin & Associés
Personal Finance Advisor
Licensed Insolvency Trustee