Valley First

Avoid Outliving Your Retirement Funds

Longevity effect is among biggest risks to financial security

According to market research firm Ipsos Canada and the Canada Revenue Agency, Canadians aren’t saving enough for retirement—they’re overspending and living much longer than they did 30 years ago. These combined factors, known as the longevity effect, can create a shaky financial foundation leading into your retirement years. Here are some tips to help you make smarter decisions when it comes to preparing for retirement.

What does your retirement look like?

When you imagine your retirement, what do you want to do? What makes you excited? Give it some thought and then work backwards to figure out what your expenses may be and what cash flow you would need. Then you can set up a concrete plan to get you on your way towards your retirement dreams.

Inflation will happen—plan for it

Keeping up with inflation is perhaps the biggest factor to consider when it comes to retirement income. People are retiring earlier and living longer, making the risk of outliving your money a very real possibility. What used to cost a dollar 30 years ago now costs around $2.50—the value of your money will likely be impacted in a similar fashion in 30 years.

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. If you force yourself to save by setting up a contribution schedule similar to a mortgage payment schedule, it will become a habit. At least 10 to 15 percent of earnings should go to your future self.

Make smart investment decisions

The debate on whether you should contribute to your RRSP or TFSA really depends on your situation. Your financial advisor can help you in making the decision on where to direct your contributions, but you should always be reviewing your portfolio. Your investments need to be dynamic and adjust to the changing situation and needs of your life.

Prepare for the worst

Protect yourself in the form of supplemental critical illness and disability insurance. The reality is you’re far more likely to suffer a ‘dread’ illness—cancer, heart attack or stroke—leaving you with increased medical expenses then pass away unexpectedly. Insurance or employer paid health plans may help cover costs, but we must be more thoughtful and plan for some of those worst-case scenarios. On top of that, focus on building an additional emergency savings fund containing three to six months’ worth of salary to cover unexpected expenses.

Your bright future awaits

You deserve a solid retirement plan. You should never feel like you don’t have enough money to sit down with a financial planner. We have a great team of experts with a range of experience to cater to all different lifestyle and retirement needs and we’re happy to meet with you to help you reach your goals.

Talk to us

Whether you’re looking for more information, or you’d like to let us know how we can serve you better—you’ll find our contact information here.

We encourage you to contact us or visit one of our branches for more information on how Valley First can make your financial life simple!

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