Planning For Retirement

A significant portion of the Canadian population plans on retiring before the age of 60 but most of them are not saving near enough money to do so. Planning for retirement is one of the most important ways to make sure that you and your family will have security when it is time to leave the work force. There are government resources that are available though they should not be relied on as a primary source of income due to their minimal funding. In order to live as a comfortable retiree it is essential to pool funds from a variety of different resources. The resources may include money from the government, savings and investments, funds from a pension plan or retirement savings at work, extra job income, and your property.

The government provides three major retirement plans, all of which require an application and pre approval process. These include the Canada or Quebec Pension Plan, the Old Age Security Plan, and the Guaranteed Income Supplement Plan. The most any one person will receive from the government each year is about $15,000 but this amount may increase if you are married or have a common law partner. Evidently the majority of your retirement income needs to come from your own assets or personal savings.

One of the most popular and efficient ways to save for retirement is an RRSP. An RRSP is a Registered Retirement Savings Plan that can help you meet your retirement goals in a tax effective way. Contributing to an RRSP lowers your income and decreases the amount of tax taken off your pay cheques. Once the money is invested it is tax deferred meaning that you will not have to pay taxes on the earned income until it is taken out of the fund. Fortunately, when the money is taken out to buy a home as a first time home buyer or is being used to finance education or training the money is non taxable.

Whether you have already started saving for retirement or are planning on starting soon, the key to retiring comfortably lies in a realistic analysis of the amount of money you need to save and being committed to doing so. Each individual’s retirement needs are different because of the numerous factors come in to play. Will you be travelling or staying at home? Do you plan on downsizing your home or staying where you are? You should also think about having elderly parents to care for, children to support through post secondary education, inflation, and your own health and well being costs. Financial institutions offer a variety of retirement plan options and a banking representative can help you develop a customized savings plan. They can ensure your retirement needs will be met and give you a clear idea of the amount of money should set aside to be able to retire comfortably at the time you want.