Valley First

Avoid Outliving Your Retirement Funds

Valley First expert shares tips on how to avoid outliving your retirement funds
February 25, 2014

Penticton, B.C.—February is often associated as a month of romance, but for many people, it’s also a time of stress and financial worry with the clock ticking down on yet another RRSP season. However, without careful planning, solid financial advice and a commitment to saving, the thought of retirement may just be a far-fetched dream. With the RRSP deadline approaching, Robert Oleksyn, an investment advisor at Valley First shares some key tips to help you make smarter decisions when it comes to contributing to your retirement savings plan.

Visualize your golden years

“We often hear that people need $1 million dollars, or they need about 50-60 per cent of their pre-retirement earnings saved before they can retire,” says Oleksyn. “For me, I usually tell my clients that the amount they need to retire is really dependent on the retirement lifestyle they choose. If someone is planning on travelling the world after they retire versus someone who plans on staying close to home and taking on smaller hobbies like gardening, their respective income needs will be very different. When I meet with my clients, I ask them to visualize their retirement and what they want to do. That way was can work backwards to figure out what their expenses may be and what cash flow they may have if they were retiring today. From there, we set up a concrete plan to get them to their retirement dreams.”

Inflation is a given

“Keeping up with inflation is probably the biggest factor to consider when discussing retirement income,” says Oleksyn. “With 62* being the average age of retirement and with all of our advances in healthcare, people are retiring earlier and living longer, making the risk of outliving their money a common reality. What used to cost a dollar 30 years ago now costs around $2.50 and the value of our money will likely be impacted in a similar fashion 30 years from now. Taking inflation into account can be a forgotten aspect of retirement planning but it’s an extremely important factor that people need to consider when they’re saving.”

Save early, save often

“It’s a mantra that all financial advisors use, but it really is one of the best ways to get a jump on adding to your retirement pool,” says Oleksyn. “Depending on your retirement plans, the amount you need to save varies, but if you enforce your savings by setting up a contribution schedule, similar to a mortgage payment schedule, it really becomes a habit. Your success in contributing to your savings or investments is really dependent on your behaviour.”

Making smart investment decisions

“The debate on whether people should contribute to their RRSPs or TFSAs rages on, but it really depends on your situation which option is best for you,” says Oleksyn. “TFSAs can be an important part of savings for retirement and for those who are earning a lower income it may make more sense from a tax perspective to max out your TFSA contributions before contributing to your RRSPs. Your financial advisor can help you in making the decision on where to direct your contributions, but regardless of whether you go with RRSPs or TFSAs, you should always be reviewing your portfolio of investments. Like the market, your portfolio should be dynamic and adjusting to the changing needs of your life.”

Oleksyn adds, “No matter where you are financially, we all deserve a solid retirement plan. You should never feel like you don’t have enough money to warrant speaking with a financial planner. At Valley First, we have a great team of experts with a range of expertise to cater to all different lifestyle and retirement needs and we’re happy to meet with you to help you reach your goals.”

About Valley First

Valley First is a division of First West Credit Union, B.C.'s third-largest credit union, which has 40 branches and 28 insurance offices throughout the Lower Mainland, Fraser Valley, Kitimat and Okanagan, Similkameen and Thompson valleys. Led by Launi Skinner, First West has $7.1 billion in assets under administration, more than 171,000 members and close to 1,300 employees.

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