Planning for retirement is of utmost importance. Why? Well, let’s consider the following seven questions and the discussions that follow:
Organization and government pension plans need to be supplemented if you wish to maintain your standard of living after retirement. The best time to start saving for retirement is in your early 20s or 30s. With the right plan, you will be entitled to significant tax savings and can retire with hundreds of thousands of dollars and even pass the million dollar mark. Even if you’re past that age, it’s still better to start now rather than burying your head in the sand and pretending it’s not going to happen.
If you haven’t as yet done so, you should set up an Individual Retirement Plan as soon as possible.
Example - Setting up for successful retirement:
Let’s say You’re 30 years old;
You put aside $300/month
Your plan is projected to earn 4% per annum
You want to retire at age 60
With such a plan, you would have contributed $108,000 by age 60 but accumulated $208,214.82. That’s the magic of compound interest! Of that amount, you will receive $52,053.71 in hand and $156,161.12 will be left to help supplement your pension over the rest of your life. The sooner you start the more you retire with so call us right now. No excuses.
Facing reality and planning the hard stuff
If you have dependents, close family or loved ones, you may want to ensure that in the event of illness, they know where to turn for coverage to take care of you and, in the event of death, they will be able to maintain their standard of living.
You should have:
Ensuring that major expenses are dealt with while still receiving a salary
Before you retire and while you are still receiving your full salary, you may want to consider buying a new car or fixing up your existing one so you go into retirement with a dependable vehicle. You may also wish to complete much needed home renovations or make over your home into a peaceful, relaxing space in preparation for retirement.
You should consider financing these expenses five to ten years before your planned retirement so you don’t have too many loan obligations when your monthly salary is replaced by a pension. Also, if you are a homeowner, you can use the equity in your home to secure financing for this purpose through Home Equity Loans (read on for an explanation of homeowner’s equity).
Paying off debt before retirement
While some people may take on additional debt before going into retirement to buy cars or renovate homes, others prefer to ensure that all debts, mortgages, loans, credit cards, etc. are paid off well before retirement. Here is a technique to reduce your debt and free up your cash before retirement.
Reduce your debt:
Commit to paying off one loan or your credit card entirely. By this, we mean that you:
When that loan is paid off, you would no longer have to make that installment and would therefore have ‘freed up’ funds. Do not go on a spending spree with those funds. Instead:
You will therefore pay off this next debt well before its maturity date. Continue using the funds that become available after paying off each debt in this way and you’re on the road to being debt free.Set up: Standing Order from your Salary Account to your Credit Card Account or Loan
Safer investments for lump sums and cash influxes
When retired or approaching retirement, you may receive multiple large inflows of cash from pension plans, matured insurance policies or even the sale of a large home as you scale down and move into a smaller, less expensive home or apartment. Look for safer investments as you won’t want to risk losing your nest egg at this stage. Lump sums should be invested in such a way as to benefit you for the rest of your life.
Consider lower risk investments with options such as monthly interest payments to supplement your income/pension.
Ask for: Term Deposits and high interest yielding savings accounts
Safekeeping for important documents and cherished possessions
In addition to keeping your wealth safe, you may also want to safeguard important items and documents such as wills, the deed for your home or expensive jewelry so you can have peace of mind knowing that these items don’t get into the wrong hands. For a nominal fee, you can store these items in a bank safe deposit locker and limit access to only those you feel 100% comfortable with.
Insurance becomes increasingly expensive as you get older and, after a certain age, you may not be able to buy insurance at all. If you cannot buy into an insurance plan and you don't already have one in place, you need to start saving immediately for the possibility of illness and hospitalization.
Ask for: Automatic Savings Plan to high interest yielding savings account and about our Home Equity Loans
Special packages with age related benefits:Customers should be encouraged to take advantage of age related banking benefits such as free services, waivers on membership fees and preferred interest rates on select banking products. Once you retire, every penny counts so ensure that you ask your banker how you can access these options.
Once you plan your retirement goals, let us make an appointment for you with our financial experts. They will consult with you to understand your specific needs and recommend a customized solution to help you protect your estate, manage your finances and achieve your objectives.
Good to know – homeowner’s equity
If you are a homeowner, you can also use the equity in your home to secure financing for:
Planning ahead for retirement years (Including the things we don’t like to think about)