Do You Have Enough Savings to Retire? Find Out Now.
In a perfect world retirement, would be something that everyone looks forward to. A chance to be rewarded for years of hard work and to enjoy quality time with friends and family.
Unfortunately, a comfortable retirement isn’t always a reality for people.
Without proper savings, many workers end up staying at their job long past 65. They also end up living in poverty if they can no longer work. The number of seniors living in poverty in Canada has been rising steadily since the 90s from a low of 3.9 per cent in 1995 to 11.1 per cent in 2013.
Needless to say, retirement is something you should start thinking about early in your work life.
Here are a few ways to tell if you have enough savings for retirement.
1. Think About Your Retirement Lifestyle
Retirement is different for everyone. When you are thinking about the amount you will need, you should start by picturing exactly what you want to spend your time doing. If you plan on having travel as part of your lifestyle you’re going to need to make sure you have plenty of savings set aside for that. You may also be considering downsizing your home or getting a part-time job. All of these factors need to be taken into consideration when you’re figuring out if you have enough savings.
2. Your Health Will Be Changing
It’s an unfortunate reality, but as most of us age, we tend to run into health problems. This is something you should always think about when considering retirement savings. Think about your health right now and look at your family history in terms of health and illness. When something comes up, you shouldn’t have to be scrambling to look for money or put our health at risk.
3. Employer or Union Pension Plan
Having a pension plan in place at your work is crucial for retirement savings, but it is also becoming very rare. Nearly two-thirds of Canadians, or 11 million people, don’t have a workplace pension plan. In the private sector that number reaches nearly 75 per cent. A way to ensure you have a pension plan in place is to gain workplace representation by joining a union. They will ensure that you’re given a proper pension for retirement. If not, you have to rely on your own savings or on the Canada Pension Plan.
4. Calculate Your Finances
There are many different ways to calculate what you will need for retirement. Some experts say you should have 10 times your final salary in savings. Others say that the minimum amount you should have at least a million dollars saved. You can also use the ‘25’ rule. Multiply your annual retirement expenses by 25 (ie: if you need $30,000 a year in retirement then you need to save $750,000). Then subtract an estimate of what you will receive from CPP and Old Age Security (OAS). The Government of Canada has a great online calculator to also help you predict how much money you will need in retirement.
Planning for retirement can seem overwhelming, but it’s crucial to start thinking about it early on. When you follow a budgeting plan you make sure you’re right on track for a rewarding retirement.
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