Retirement...
it’s a time many of us look forward to.
It’s a time when we get to slow down,
enjoy life, and finally,
you have the power to say No!
But, if you haven’t saved up enough money,
living on a reduced income may be a struggle.
A struggle you don’t want to worry about when you
have so much living to do and a world to explore.
The Average Canadian retires just before their 65th birthday.
Self-employed Canadians retire a bit later
at around 68 years of age.
And Of course, more and more people still
continue working and saving money because
they think they can’t afford to retire yet.
And that’s why for today’s video.
We will look at how to save for your retirement
and how much you need during your golden years.
Hey, this is Thomas!
Your Trusted Advisor for
Retirement, Wealth, and Insurance in Canada.
With today’s topic, my goal is to help you make
better financial choices today so you can
live your golden years without financial stress.
Let’s get started!
When you think of your retirement,
what do you see?
A beach? A cabin? A downtown condo?
Are you still living in Canada,
or are you going to travel the world?
You’ve likely worked hard for the past 45+ years
to get to this day.
So I suggest your first step is to estimate how much
money you need to live the lifestyle you want.
Things to consider include:
Where you will live?
This might be your long-time family home,
a cabin on the lake, a small condo apartment,
a bungalow on a Caribbean island,
or a retirement living community.
You can live nearly anywhere you want,
just keep in mind that some places
will cost more to live in than others
and that should be considered in your financial plan.
Next, we can see
What will our retirement hobbies gonna be like?
Are you going to do puzzles?
Take up golfing? Become a Scuba Diver?
Read more Books? Retore old cars?
Go for daily walks on the beach?
Obviously,
some hobbies are more expensive than others,
so just be sure you set aside some money
for hobbies (old and new).
Do you plan to travel more?
I know there aren’t much travelling
can be done in these 2 years.
But when things are getting better.
How often or how far do you want to go?
As we know,
travel can be expensive,
so if you want to travel more, start saving now.
Other things to look at are any current debts
or loans you may still have when you retire:
Will your mortgage be paid off when you retire,
or will you still be making payments?
Any cars or recreational vehicles to pay for?
Do you need to financially support
anyone else in your family?
So, how much do you need
to retire and live your dream lifestyle?
The amount of money you need to retire,
varies depending on many factors
I’ve already mentioned.
Now I know the model text book answer will say
you probably require less money per month
in your retirement years than you do now.
This is because you’ve likely already paid off
those big debts like your mortgage,
and you don’t have the costs of
commuting to and from work,
among other things.
According to a SunLife Retirement report,
retired Canadians live on about 62% of
their pre-retirement monthly income.
This means if you spend an average of $3,500
on monthly expenses now,
you’ll only need $2,170 per month
during retirement.
But the reality is,
the cost of good has increase quite a lot in
the last 2 years and I am sure this will
continue for the next many years.
And a lot of retirees now are re-mortgaging
or borrowing against their home equity
in order to support either their retirement
or their family member’s financial goals.
And compare to say 10 years ago,
how many things that are suppose to be
your wants now become your needs.
Can you live without your cell phone now?
How about wifi?
You might say,
I am probably not going to live out
my golden years in Canada.
If you think a move is in your future,
here are some interesting numbers
about retiring abroad:
Bermuda is the most expensive country
in the world to retire in
(with the average person needing
$1,065,697 to retire on the island)
Pakistan on the other hand requires
the lowest to retire in
(the average person can live comfortably on
$182,018 over their retirement years.)
Here are a few popular countries to retire in,
and the retirement savings
you’ll need to live comfortably there:
Canada: $496k
The United States: $601k
Countries in Europe, like UK, France,
Spain ranges from 500,000 to 1 million
Countries in Asia like China, Japan,
is around $600k
Of course, your lifestyle choices,
like travel plans, hobbies, eating habits,
and other spending, and most important,
the tax will make these numbers vary.
If you plan to retire abroad,
do some research into the cost of living
in your chosen country.
So to quickly sum up,
first ask yourself what do you want
to do during your retirement?
What is that going to cost you per year?
Then times that by 20.
Now,
how are you going to pay
for your retirement lifestyle?
Let’s look at all the places your
retirement income will be coming from.
Usually it comes from 3 pillars,
First,
it’s from your work,
like A company pension plan.
If you paid into this over the years,
make sure you check the statement annually
so you know when these funds will be available
to you and how much you get every month.
Besides from pension plan,
they might have group RRSP matching
or discounted stock options.
Those are helpful as well
Then the next pillar is from
our Canadian government.
For example,
the Canada Pension Plan (CPP):
You’ve likely been paying into this for years
if you are working for some one!
The Old age security on the other hand
will pay depending on
the length of time you live in Canada.
Also, you have Guarantee Income Supplement
if your annual income fall below in certain threshold.
I have a video that talks about these three benefits,
you can click the top corner to check it out.
The final pillar will be coming from your own savings.
For example,
If you’ve been squirrelling away money into
an RRSP or TFSA,
add that to your financial budget.
You may choose to downsize your principal house.
All the profit will tax free,
you can use it to fund your retirement.
And you will be paying much less
maintenance fee and property tax
Or hey, you might have a wack load of cash
under the mattress.
I am kidding!
What I meant is you might have a lot of money
sitting in a saving account that is not beating inflation.
So time to reevaluate your retirement saving.
If you find that you need additional income
during retirement,
here are some other ideas:
You can get thousands of dollars a month renting out
a vacation property on a site like Airbnb or VRBO.
Or if you don’t have interest or time.
You can always hire a property manager
to manage the property for you,
so you just cash the cheques
while people are handling the troubles
Do you have any specialized career or life knowledge?
Offer to be a mentor or speak to organizations,
universities, or individuals to impart your wisdom.
while some of this mentorship may be volunteer,
some opportunities might put you
even in a higher income bracket.
My best advice to get the retirement you deserve
and can financially afford is first figure out what you want,
what is that life style going to cost you in a dollar figure.
AND are you currently on track with your saving goal?
If you are on track with your retirement saving,
then the last 2 questions are
how tax efficient and
how retirement proof your portfolio is.
And as usual,
if you have no idea where to start or not sure
if your retirement saving is on track or not?
I have a link in the description box below,
you get to have 30 min free consultation
with my team and I.
I am sure we can give you 1 or 2 strategies to optimize.
Until then,
if you found even one golden nugget in this video,
please share your thought and smash that like button!
It really helps the YouTube algorithm and show to
more Canadians who need this valuable information.
Alright!
Thanks so much for watching!
This is Thomas.
I will see you in the next video.