Tag Archives: Retirement

Not Your Dad’s Pension Plan

PensionPensions have changed a lot since the early days when employees could rely on a generous defined benefit (DB) plan to take them through their retirement years. DB plans, which guarantee a set payout on retirement, are being replaced by defined contribution (DC) plans or Group RRSPs.

With these plans, there is no guaranteed benefit at retirement. Employees are often required to opt in and, in some cases, make investment decisions themselves. It’s still an important way to save for retirement, but it takes more effort from plan members – it’s your responsibility to stay on top of it.

No matter what type of retirement benefit plan you have at work, you should make sure it fits into your entire financial plan. Are you making the right choices? Are you contributing enough? Here are a few things you need to do to make sure you’re making the most of your savings at work:

1.     Jump in — if you haven’t joined the plan, don’t delay. In particular, if your employer matches your contributions, you’re turning your back on free money!

2.     Choose to choose – don’t get stuck in the default fund. If your plan lets you decide where to direct your contributions, then you need to choose the investment options designed to grow your savings. Staying in the default fund could mean your money is in a low risk and low return fund that won’t meet your needs when you want to retire.

3.     Make it part of the plan – Talk to us about it. We can help you make the choices you need to ensure that your plan at work is a complementary part of your overall financial plan.

Make Retirement the Time of Your Life: Ask Yourself Three Questions

You’ve spent years in anticipation of retirement – now that it’s around the corner, it’s time to realize there’s more to retirement planning than just financial security. If you’re only saving for basic living expenses once you retire, then you may want to revisit your plan. Retirement should allow you to pursue your interests and dreams. Take the time to sit down and decide whether or not you are saving enough to fully embrace life after work.

Consider this: the average Canadian now lives to about 80 according to Statistics Canada. That means you’ll have between 15 and 20 years outside of full-time employment. That’s a lot of time and you want to make sure you’re prepared financially to enjoy yourself, not just live day by day.

Ask yourself a few key questions to help you decide whether you’re on the right track to make the most of the rest of your life after retirement:

How will you spend your time?

Looking at retirement as an extended holiday might work for a while – but don’t leave yourself open to boredom. Are there any new skills you want to learn? Or passions you have not had time to pursue because of your work schedule? Taking a course or signing up for lessons to learn a new skill can not only add some structure to life post-retirement, it can help you find inspiration in something new.

Where do you want to live?

This is something you want to consider before you retire. If you plan to divide your time between cottage and city or, say, Florida and Canada then some up-front financial planning can help you determine what’s realistic and how to make it happen. While you might not have enough money to buy that beachfront condo in Sarasota, you could set aside money to rent your dream place for a few months every winter.

Am I ready to stop working?

If you’re nervous about taking a giant leap into retirement, try baby steps instead. Talk to your employer about shifting to part-time in order to make the transition easier. Or, there may be opportunities for contract or freelance work, either with your employer or someone else – keep an open mind. You may still have your best work years ahead of you.