7 Ways to Stay on Track and Meet Your Retirement Goals

Are you on track to retire comfortably? What are your financial goals? How much income will you need to generate each month when you retire? What might be some of your longer-term goals outside the financial arena, but goals that would be aided by a larger pool of savings?

We try to have regular check-ins with our clients; designed to measure progress toward their goals, making adjustments as life’s journey unfolds.?Saving for retirement is a long game; it’s a marathon. You could compare it to the fable The Tortoise and the Hare. A sprint won’t get you to your destination. Slow and steady progress will.

Unfortunately, 65% of Canadians do not use a financial advisor (according to a poll conducted by Advisor’s Edge Magazine) for this long haul. In our view, that’s simply unacceptable. It leaves far too many folks exposed to the many financial pitfalls that are lurking. As Ben Franklin said, “If you fail to plan, you are planning to fail!”

Fortunately, you do have professional support available; we can help you put a plan in place. Following are seven ideas that we encourage on a regular basis. You have may already implemented many of these concepts; others may want to start doing more.?And they are all excellent reminders of what keeps you on the path toward financial independence.

1.?????Set goals. Too many people simply guess what they will need in retirement, and many don’t have a written plan to reach what goals they have set. Others simply don’t have any goals. If you don’t have goals, you’ll drift, financially speaking.

2.?????A comprehensive and holistic financial plan is a must. While regular savings is important, a roadmap that takes you to your goals is critical.

Did you know that if you start saving $600 per month at age 30, you will have $1 million when you turn 65, assuming an average return of 7% per year.

If you start saving at 20, $300 per month will allow you to hit the same goal.

We’re not saying that $1 million is the magic number, but the example highlights that consistency, starting early, and the magic of compounding can help you reap big rewards.

?We assist our clients by advocating a diversified portfolio that generally includes stocks, bonds, fixed income and more. While much work goes into the individually crafted plans we recommend, much of what we counsel is based on the evidence that long-term exposure to equities has outperformed simple savings accounts.

?We help to bridge the divide between the simple savings account and a diversified portfolio.

3.?????Never stop saving. After paying for housing, food, and other expenses, are you able to consistently save money? A 2018 poll by BNN Bloomberg showed that 32% of Canadians aged 45-64 had not saved any more for retirement!

Why aren’t we saving? According to other surveys, people feel they have too many expenses. For example, on average Canadians shell out more than $2,900 a year on restaurants, prepared drinks, and lottery tickets.

We aren’t saying that a spartan existence that eliminates frills, fun, and entertainment is the path to take. Instead, examine your expenditures closely. You might quickly find ways to cutback while still enjoying life’s pleasures. And consider paying yourself first when you receive your check by setting up an automatic payment into savings.

4.?????Retirement savings is a key component. If you want to stay on track for retirement, the importance of regular contributions to a retirement fund is critical.

For the 2022 RRSP season, you may contribute 18% of your income, up to the maximum of $29,210 (an income of $162,278, in 2021, would be required to achieve this maximum).?Also in 2022, the maximum TFSA contribution is $6000 for the year.?This brings the total amount available for deposit up to $81,500 for anyone who has never contributed.

?Look at the retirement savings plans available through your employer.?Many who offer plans will also provide some form of matching of your contributions.?At a minimum, don’t leave any free money with your employer. Be sure to contribute what you need to receive your employer’s full match.

?5.?????Did you get a new job? Congratulations. As you look at benefits, how quickly can you start contributing to your company’s retirement plan?

?Plus, don’t forget about your prior employer-sponsored retirement savings plans. Roll them into your existing RRSP or LIRA. Unless there is an extraordinary circumstance (and we’re not talking about a new TV or a vacation), don’t fritter away your retirement assets. Withdrawals from these tax-deferred plans will be subject to taxes and penalties.

6.?????Get out of debt today. Some debt can be productive. For example, a mortgage allows you to purchase a home and build equity instead of renting. But in many cases, debt can be counterproductive.

?Your student loans helped you pay for your education. Although the situation with student loan debt is fluid, this is debt that’s best paid off. Credit card debt also falls under the unproductive category. Besides, many come with high interest rates.

?As with credit cards, student loans, and other unproductive liabilities, we can offer you guidance that helps reduce and eliminate burdensome liabilities.

7.?????Check in with CRA https://www.canada.ca/en/revenue-agency.html has a considerable arsenal of resources. It’s a good idea to check in online and make sure there has been an accurate accounting of your annual income. If your income is understated, your future benefits could be shortchanged.

Our goal is to help you replace a substantial portion of your income when you leave the workforce. How much will depend on your goals and what you may want to do in retirement.

But we firmly believe that these ideas are a great place to start, putting you and keeping you on track for your retirement.