While saving for retirement at an early age comes with many benefits, living comfortably in retirement is still very much in reach for late starters. Here is how a Cambrian Advisor can help you plan for retirement, whether you’re just starting or are closer to your goals.
While starting to save for retirement at an early age comes with many benefits, living comfortably in retirement is still very much in reach for late starters. When you finally decide to put a plan in place for saving for retirement, meeting with a Cambrian advisor is a good first step.
A key part of preparing for your retirement is ensuring that you understand your future income sources and save money in a way that will allow you to maximize your retirement benefits while reducing the amount of tax you pay. Working with an advisor can help you decide what’s right for you.
“Sitting down with one of Cambrian’s Advisors who can assist you with understanding the various retirement accounts available and how they would best fit your unique circumstances is a recommended step in planning your retirement,” says David MacRae, Director, Wealth & Advisory Services.
“Thoughtful structuring your savings across various retirement accounts while you’re still working will give you much greater control over your future income taps to strategicly navigate the tax brackets and preserve government benefits and tax credits, such as Old Age Security and Age Amount,” he says.
Your retirement savings strategy will depend on your circumstances, including the amount of money you’ll need in retirement and whether or not you will have a workplace pension. “You can’t control the money received from a workplace pension, but you can control the amount of money you draw from an RRSP, TFSA or non-registered investments,” MacRae says.
MacRae recommends you ask yourself the following questions before planning to meet with a Cambrian Advisor. Understanding your needs and retirement goals will help your advisor develop a strategy that works for you.
Financial advisors look at two key aspects when working on a financial plan.
1. How much have you already saved?
Establishing exactly how much is available in retirement savings while also considering future income streams, such as retirement pension plans or CPP and OAS, is essential in creating a comprehensive retirement plan.
2. How much income will you need in retirement?
The rule of thumb says you need approximately 70% of your pre-retirement income, in retirement.
“We would like to refine that further and work to a more realistic number specific to the member’s situation,” says David MacRae. “We need to understand what a member’s idea of retirement looks like. Will they spend most of their time at home playing with their grandchildren or do they want to travel, and if so, how often and where to?”
“Cambrian’s experienced advisors will design a custom strategy that will allow you to transition into retirement confidently,” MacRae says. He also suggests using the NEI Retirement Calculator to understand whether you’re on track to meet your retirement goals.
When creating a strategy to reach an investor’s retirement goal, financial advisors have four variables to work with:
Amount saved
You can boost your retirement savings by increasing monthly contributions to your retirement savings accounts. If you don’t already make ongoing contributions, your financial advisor will help you set realistic monthly targets.
“If a member’s budget doesn’t allow them to save more money, leveraging or borrowing money may be an option,” MacRae explains. “But this is cautionary and needs to be suitable to the member. For starters, they need a net worth that allows this option.”
Retirement income expectations
Sometimes the income you can expect in retirement needs to be re-assessed. For example, if your income is less than planned, you may need to revise your retirement budget and expenses.
Retirement age
Postponing retirement, even by a couple of years, can make a big difference in building up additional retirement savings.
Risk level
This variable is typically considered a last resort. As with all investments, the greater the potential return, the greater the risk, and it’s a matter of establishing how comfortable you are with taking additional risks to catch up to where your savings should be.
“We ask our members in which order they’d like to change these variables to reach their retirement goal. Then, depending on their preference, we start working through a strategy in our planning software,” says MacRae.
Regarding retirement, the best time to plant a tree was yesterday, but the next best time is today. So even if you’re late to the game and you’re worried that your retirement savings may be insufficient, meet with a Cambrian Advisor and see how you can still reach your retirement goals. It’s not too late yet, but the sooner you start, the better.
Check out Cambrian’s Retirement Assessment Calculator to see if you’re on track to meeting your retirement needs.
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