Four Steps to Retirement Planning in Canada
Planning for retirement is the most important thing you should do to secure a comfortable financial future for your family. For most Canadians planning for retirement is one of the major financial goals which need extreme financial commitment. So if you are nearing 60, then start saving to lead a comfortable retired life. But unfortunately, people spend more time in planning vacations than planning their retirement. Follow these steps to plan your retirement.
- Determine your expenses
Your expenses, and not your income, will determine how much you need to save for your retirement. Start tracking your fixed and variable expenses, several years before you expect to retire. This will show a realistic picture of your cash flow. Take in to account the expenses that you can eliminate at the age of retirement like the deposits in the retirement plans like IRA. Deduct this from your total annual expenditure.
- Eliminate all kinds of debt
The most common mistake made by Canadians is to ignore their debt issues while they are earning. Instead of managing their debts, they devote time in investments which seldom offers worthwhile returns. Calculate all your debt obligations and make out some way to pay them off. If needed, seek debt help as there are various agencies who offer debt help. Continue paying off your debts until you even pay off your mortgage loan. The more you pay off debts while working, the better you can utilize the savings from the retirement plans.
- Save money through an RRSP
An RRSP is Registered Retirement Savings Plan which is an account where you can save money for retirement. RRSP helps to reduce tax and therefore encourages you to save more. You do not need to pay the tax on this amount until the money stays in the RRSP, but if you withdraw the money, you are liable to pay tax on it. It is better to withdraw the money after retirement so that the total amount is not subject to any kind of tax.
- Retirement housing planning
Housing has been a very sensitive issue for most senior Canadians. There is one housing option which is taken by many senior Canadians, that of a retirement home. Retirement homes are rental accommodations that are privately owned by seniors in Canada. These are designed for seniors who need minimum to moderate support for their daily living. Some independent retirement homes also include subsidized housing that offers rental assistance from the federal government.
Take in to account the above mentioned steps to enjoy your leisure post retirement. Accumulate the adequate amount of income to ensure a happy retired life.