(Special) – While February is a month when many Canadians finally get down to thinking and doing something about their yearly Registered Retirement Savings Plan (RRSP) contributions, it also can be a good time to revisit your overall financial situation and make some resolutions to get more financially fit during the new year.
A recent poll by CIBC shows that Canadians need to improve their level of financial fitness.
In the poll, Canadians estimate they will need $756,000 in retirement savings to achieve the lifestyle they want in retirement but 90 per cent don’t have a plan in place to get there.
The poll also found that 53 per cent of Canadians aren’t sure if they’re saving enough, 37 per cent either aren’t able to save or haven’t thought about retirement and almost a third (32 per cent) of those age 45 to 64 who are approaching retirement have nothing saved for retirement. Among those who have retirement savings, the average value of their nest egg is only $345,000 while almost half (49 per cent) have saved less than $250,000.
Jennifer Auld, vice-president of TD Canada Trust for the Ottawa West district, believes RRSP season is a great time for Canadians to start thinking about creating a plan for their retirement and improving their financial fitness.
“With increasing longevity, retirement today is a lot less defined than it was in the past, so it’s very important to first define what your goals are, get advice at the right time and revisit your plan regularly to make sure you are staying on track,” Auld said in an interview.
Auld suggests people take a measured, systematic approach to improving their level of retirement fitness.
The first thing to do is to look at your retirement from a holistic perspective. What are your goals for your retirement in terms of lifestyle, finances and health? Work with a financial adviser to determine your sources of income, expenses, assets, and a savings program to ensure you have the financial resources to support the retirement lifestyle that you would like to have.
Then set up a program of automatic savings and/or investing. Whether it is weekly, biweekly or monthly, set up a system where you put money aside regularly. If you have an employer pension this often can be done through regular deductions from your paycheque or do it individually into your self-directed RRSP, Tax Free Savings Account, or into non-registered accounts.
Financial advisers often recommend people maximize contributions to registered accounts like RRSPs, TFSAs and Registered Educational Savings Plans (RESP) first and then, if they have money left over, invest in non-registered accounts.
“Regardless, set up an automatic savings program and start developing an income stream,” Auld says. “You should work with a financial professional who can help you ensure that you have the right mix of accounts and investments so you are doing this in the most tax efficient manner as possible.”
Auld recommends people set up an emergency fund of at least three months of income in the event that the unexpected happens such as the loss of a job and consider insurance that can often provide money in the event of illnesses such as cancer, heart attack or stroke.
It’s also a good idea to review your investments at least once a year to make sure the level of risk is still relevant to your current situation and goals.
“RRSP season is a great time to think about new beginnings, fresh starts, review where you’re at and where you’re going in the future,” Auld says. “Taking these steps can go a long way to becoming more financially fit and confident about your future.”
Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.
Copyright 2019 Talbot BoggsNews from © Canadian Press Enterprises Inc. 2019