The Scary Reality of Retirement Planning (that doesn't have to be yours)
DID YOU KNOW?
32% of Canadians between 45 and 64 have nothing saved for retirement, and over half of Canadians say they don’t actually know if they are saving enough, according to a recent poll by CIBC. 32% have NOTHING saved in the last leg of the savings time frame – does that seem crazy to you?
You want to live your best life today, but are you willing to do that at the cost of your retirement? Proper retirement planning is all about balance –enjoying things you like doing today, all while saving for retirement so that you can maintain a similar lifestyle in retirement. While so many Canadians are looking forward to their retirement so that they can travel and spend quality time with their friends and family, there is a huge disconnect when it comes to actually saving for it. There is a huge difference in dreaming big and saving big!
Why aren't people saving for their retirement?
Why are people saving so little, and starting so late? There are many factors, but here are the major ones: lack of education around the need to save, and the amount needed for retirement; people remaining oblivious for too long and therefore start saving much later in life. Many Canadians also find themselves in debt. The idea to buy now and pay later have left many needing to use funds to pay down debt and high interest rather than allocating these funds towards a retirement fund.
Lack of Education
People are unaware of the risks surrounding accessing their retirement income, and many will make poor choices which ultimately means they will receive less income in retirement than they could have achieved.
Remaining Oblivious for Too Long
Timing plays a big part in how much you’re able to save by retirement. The earlier you start, the less on a monthly or annual basis you need to put aside to reach the same milestone.
For example, as a 20 year old, you would need to save about $361/mth at 6% rate of return to have a million dollars at retirement. By waiting 5 years (from 20 years of age to 25), the amount you need to save goes up by 38%! The difference between the 20 year old and the 30 year old is a premium increase of about 93%!
So what’s the message here? Retirement planning is important. Start earlier, and be an advocate for the young people in your life. The earlier you start, the significantly less you need to save on a monthly basis.
The Good News
Is it your fault if you don’t know a whole lot about the basics of finance? No. You may be an expert in your field, but we don't expect you to be an expert in ours! That's why Wealth Management Specialists exist! Don’t worry – you have access to all the help you need. Don’t let yourself be in the 68% who haven’t made a financial plan
There is still time to contribute to an RSP for 2019. March 2, 2020 is the deadline, so there's no time like the present to start saving towards your golden years!