5 tips for financial success in later life

The things you need to do to build your finances which can support your wants and goals are simple. Sometimes doing them isn't so simple. For most people, this becomes a matter of choice. Practice makes it easier. Here are some tips to build lifestyle success for your future you.

1. Have a plan.

Does having a written plan mean you will miraculously have more money? It does reduce stress since you have a roadmap to guide you. How else will you know that you're on track; that you will be okay? Following through on your plan builds confidence and competence. It may even improve your happiness and sense of accomplishment. Consider the age old observation that most people spend more time planning their next vacation than planning for retirement. More than ? of Millennials ages 26-41 spend more time planning for vacations than retirement. (1)

If you can’t imagine what it will be like to be 60, 70, 80 years old or more, try thinking about what it will be like to be that age without any money.

The harsh reality is that if you don’t put in the consistent effort to write down, follow and review your plan for retirement, your plans in retirement will be a lot simpler and less fulfilling. You may not be able to afford to do the things you want to do or in the way you want to do them. In the end, those people that have written plans that they follow, review and stress test, do tend to be better off financially and emotionally.

2. Reduce your debt.

Debt used to be a four-letter word. Now it's just a word. One challenge with carrying debt is that the cost of the things and experiences you buy can be much higher than the price you paid. The money you spend on interest expenses could be working for you, building your nest egg and giving you some peace of mind today and through all your tomorrows.

Okay, most people have some debt. Make sure yours is manageable and that you have an end goal to retire it before you are retired.

3. Have long-term savings.

Almost 60% of Canadian pre-retirees are contributing to retirement savings. The average amount that Canadians hold in RRSPs (Registered Retirement Savings Plans) is $144,613, as of 2022, according to StatsCan.(2) Other savings boost the average amount. One-third are nearing retirement without any savings.(3)

What can you do to boost your long term savings? Participate in a company plan if one is available. Take full advantage of a Tax Free Savings Account (TFSA) and a Registered Retirement Savings Plan (RRSP). Optimize any opportunity to save money in a company savings program where the company matches contributions. Consider investing money in funds for the opportunity to participate in tax preferred savings including dividends and capital gains. Now leave the money there to grow for the long-term.

4. Practice saving money.

Saving more money was the most popular financial resolution among Canadians for the 2023 new year. (4) How have your financial resolutions worked out? One key to making this tip work for you is to pay yourself first. Set a goal and stick with it, spending what’s left. Practice builds habits. You can build on habits now and save even more later. Those habits can calm people down considering that almost ? of Canadians said that saving money was mentioned most often as a cause of financial stress since they weren’t saving enough, if at all. (5)

5. Set realistic expectations.

I refer to this a lot. It’s key to being more content all the way through life. And I don’t mean lowering your standards or not dreaming big. It is about setting goals that may be a stretch and are achievable. This can help build confidence in your ability to save, invest and accumulate money for the near term like a holiday, the medium term, like a car or house and the long-term so that you can live comfortably when you get older.

If you can’t imagine what it will be like to be 60, 70, 80 years old or more, try thinking about what it will be like to be that age without any money.

You may well need a lot less money to be comfortable in retirement than what you often hear. Some of that has to do with?spending during retirement. It's not what you're generally told.

If all of this still seems a little daunting, get some help from an accredited advisor. Get professional outside help anyway, to stress test your plans and explore all options.

?Sources:

1. Personal Capital Survey, 2023, Millennials’ Travel Trends and Statistics in 2023, 55% of Millennials say they spend more time planning for vacations than for their retirement.

2. The Four Pillars of the New Retirement, 2022

3. 2023 Canadian Retirement Survey from Healthcare of Ontario Pension Plan (HOOPP) and Abacus Data; 44% of Canadians aged 55-64 have less than $5,000 saved and one in five workers have nothing put by at all.

4 Finder: New Year’s Financial Resolutions report Jan. 2023

5. Thriving or Surviving Study, 2022

The material in this article is current as of the date published. This material is presented for informational purposes only, and is not a legal, tax or investment opinion. The provision of the information contained herein and any oral or written communication regarding the same should not nor is intended to be construed as such. Interested persons should seek and retain independent professional advice before acting or foregoing action in relation to any of the matters mentioned herein reflected as of the date published or updated.

??2019, 2023 by Peter Wouters. Republished with permission by Peter Wouters. For the complete list of articles, please visit?here.

?Updated Aug. 2023

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