How much money do you need to save for retirement?
One of the most important financial planning decision you'll ever make is deciding if you have enough savings to provide you enough money to maintain your standard of living throughout your retirement life. People like to save money for retirement because most they do not want to keep working full time during their retirement.
You should be working with a financial advisor
You should be working with a financial advisor if you are paying for financial planning.
A financial plan will give you an estimate to the question of how much you need to save for your retirement.
How much should you be saving is the most asked question: It depends on the individual and circumstances..You should always remember that numbers never lie. In short , there is no definitive “retirement number.A well done financial plan will help you find your the amount of money you should be saving for your retirement.
Many of financial advisors recommend people to save at least 15 to 20 % of their income from their 20s.This is just a general suggestion. Every individual is different and you need to check thoroughly to be able to determine your retirement goals.Early 20s is the best time to start saving up for retirement.If you start saving up early , you will only have to put 3-5% of your monthly income.
An important step in retirement planning is to calculate your “income replacement rate”
If you are like most Canadians, you spend your money on personal spendings,taxes,benefit plans (such as employment insurance and Canada ,personal savings (such as RRSP).
Financial advisers have believed that you should focus on replacing 60% to 70% of your pre-retirement income. But now a days most of Canadian people live longer than the old generation and they are living an active life style. Our suggestion is to aim on replacing 75% to 85% of your pre-retirement income.
Your lifestyle is also important when it comes to saving for retirement. – The amount of money that you will need for your retirement will depend on the life you plan to live on your retirement. If you are not sure what you are going to do in your retirement , you can simply take a retirement life style quiz online and find out how much your retirement life will cost .
Federal government benefits – You could be entitled to government retirement benefits like the Canada Pension Plan (CPP), Old Age Security (OAS) and the Guaranteed Income Supplement (GIS). If you’re eligible for those, you will not have to save as much. Make sure you learn more about government retirement benefit plans.
Using an online retirement calculator is the best way to determine your retirement goals .By using an online calculator you can figure out how much you need to save and accumulate in order to reach your goal. Make sure you check and update your calculation at least every year to see if you are on the right track.http://www.servicecanada.gc.ca/eng/services/pensions/cric.shtml
According to recent researches you need more less $900,000 in your retirement savings to have a comfortable retirement life.
If you are a last minute saver you should follow these tips for retirement savings
- -Take advantage of unused RRSP contribution – If you have unused contribution in your account , you can use it as soon as you are able to use tax-sheltered savings.
- Invest money on a TFSA – As of January 1, 2013, you can invest on your TFSA $5,500 every year. The money is tax free and you won't need to pay any tax when you want to withdraw the money.
- Try to save more ! – Try to cut your small spending such as expensive gym memberships,expensive liquors, try to quit smoking if you have a smoking habit. Everything will add up and help you to save more money for your retirement.You can also use your work place pension or savings plan if you have these kind of contributions.Your children will have chance to get a government loan when they need money for their education. and if you have enough money that time , you can help them to pay off their debt.So therefore, you can choose saving less for your kid's education and put all that money in your retirement savings account.
- Reconsider your investment strategy – you should look for different ways to increase the growth without taking any more risk. You should not only focus on conservative saving strategies for your retirement savings, the amount of your retirement savings will not grow quick enough to give you the income that you expect to have when you retire.
Material contained in this article is for information purposes .The information presented here is not specific to any individual's personal circumstances.