Are you jeopardizing your retirement?
While retirement may not seem like a priority today, the longer you delay planning – the longer you delay retirement.
Mistakes you can avoid:
1. Random RRSP contributions
Are you contributing the maximum of your RRSPs? This is not a tax efficient plan for everyone’s situation. Are you contributing in lump sums days before the RRSP deadline? Frequent or monthly payments let you dollar cost average your contributions which in turn gets your RRSPs to grow more quickly. Are your RRSPs in several different financial Institutions? You need an investment strategy to make sure that your RRSPs are well diversified which decreases your risk in the long run.
2. Not having a plan.
Do you know how much you need to save for retirement? The younger you are, the less you have to contribute. You need to know how your work retirement plan (if you have one) will impact your individual retirement plans. Do you know how much you need for retirement? People are retired for 20 to 30 years now, so it is very important to calculate the impact of inflation and lifestyle during your retirement. Have you started? Even starting small now can dramatically improve your retirement income.
3. Sacrificing your retirement to pay for the kid’s education
Have you asked your children to apply for the Canada Student loan? Some of the loan may not have to be paid back as bursaries are often given out to students. Also – the money is interest free until 6 months after graduation. Have you cashed in RRSPs to pay tuition? If so – then you better get an agreement in writing that you can live with your children in your old age!
4. Not being prepared for emergencies
Do you have the right amount of insurance if you become sick, disabled or if your spouse dies? Retirement dreams can be slashed when an unexpected health issue comes up. Review your work and personal plans on annual basis and buy individual plans if the work plan is not enough coverage. Do you have an emergency fund? A savings account is the solid base of your financial plan. An emergency account can save you from cashing in RRSPs and jeopardizing your retirement.