Planning Retirement For Canada: 10 Tips

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Planning Retirement for Canada
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Have you started planning for retirement in Canada? Depending on the city you live in, the amount you need are drastically different. Here are 10 tips that can help you get started below.

To help you succeed in your retirement goals, we have created these other articles that can help you.

Planning Retirement For Canada: 10 Tips

1. Have A Budget

This is a very important aspect of your retirement planning. You want to make sure that you are in full control of your expenses. A budget allows you to place your income side by side with your expenses. With a well-planned budget, you can determine what is important and what is unnecessary, that way, you can track your expenses. It is important to note that the budget you are creating is for both your current income and expenses and that of post-retirement. Having a budget for your post-retirement will also help you spend your retirement savings wisely. These budgets must be realistic.

Do not forget that the aim of the budget is to help you with your expenditure, so don’t strain yourself today all because you want to save for retirement. There is no point living broke today and causing health complications that may take your money post-retirement. A budget is to help you make shrewd financial decisions. Your budget during post-retirement will be different from your current budget. You don’t have to commute to work or buy clothes for work, and some of your daily expenses will no longer be required because you are not actively working. Such extra cash can be used to create a sufficient budget during post-retirement.

2. Avoid Debts

Retirement planning requires funds from every source you can get and one thing that stands in the way is debt. Debt is a financial burden for most and it is known to be the root cause of most people not achieving their financial goals both during active service and post-retirement. According to statistics, 1 out of every 3 retirees in Canada owes some form of debt or the other. This is a bad ratio and it simply means that most retirees do not get to enjoy their post-retirement because of debt.

To avoid being among this category of retirees, ensure that you pay off all your debts before retirement. This includes your mortgage, car loan, credit card debts, and any other personal loans. The interest rates of debts make it difficult for your to live comfortably on what you earn. Now imagine that you still have to settle debt with your retirement saving when you are no longer active to continue to earn money. when creating your budget. Ensure that you have a debt payment plan that will see that all debts are paid before retirement. Do not completely neglect this as you will have to pay for it with your retirement funds. There is no fun in that. Once you are free from debts, make sure you avoid getting into another one. If you have to, ensure that any money borrowed is what you can return within the same month you borrowed it, this will help you avoid interest rate payment.

3. Cut Unnecessary Spending

Once you start saving for retirement, you need to cut your spending. Especially on expenses, you can do away with. You need all the cash you can get to build a sustainable retirement savings portfolio. Expenses like eating out, weekly shopping, vacationing every month and other activities that gulp money that you can survive without. This is not to suck the fun out of your life but to make sure you are financially secure post-retirement. That is not to say you won’t do any of these at all, you just have to cut it down significantly. The cash you save from this can be diverted into your retirement savings.

Financial experts advise that you save between 10 to 15 percent of your incoming. An emergency fund should also be part of this percentage. If you can cut unnecessary spending, you will have extra cash at your disposal and you can divert this into your retirement savings.

4. Know How Much You Need For Post-Retirement

This is often overlooked by Canadians in their retirement plan. Most just have a round figure they think will be enough and begin to save. Statistics show that only 47% of Canadians know how much they need for retirement. It is important to know how much you will be needing for post-retirement so that you won’t overwork yourself to save or not save enough. Plan your post-retirement lifestyle, set your post-retirement financial goals and you will be able to have the magic number as they call it. Knowing the number also helps you to plan a budget that will help you save towards the goal. While there is no exact figure needed for post-retirement, it is good to have an estimate to work with.  

5. Make Provisions For Your Health

Ensure you have sufficient health coverage for post-retirement. Health is one of the major expenses during post-retirement due to age. To adequately cover this, make sure you have a plan for health insurance. You can take private cover asides from government health benefits. That way you can have enough for post-retirement living.

6. Work For Bit Longer

Hitting the retirement age does not mean you should stop working. You can still take on a few side gigs or part-time jobs that can still earn you some cash. This will ensure that your retirement savings will be sufficient and will not place a burden on them immediately after you retire. However, you should take on jobs that will not complicate your health later. This will also help you ease into retirement by ensuring steady cash flow, even though it is not up to what you were earning.

7. Learn More About Discounts & Tax Credits

These are ways of relieving the burden on your retirement savings. But you can only enjoy them only if you know about them. Learn more about discounts that travel agencies, stores, and insurance companies offer to senior citizens and retirees. Tax credits can also be used to lower the tax obligations on your retirement earnings. There are tax credits that retirees and senior citizens enjoy in Canada.  

8. Invest Early and Consistently

Savings only will not grow your retirement savings to your desired figure and one sure way to achieve this is through investment. The importance of investment cannot be overstated. Once you start your retirement savings, it is important that you consider investing the funds so that they will grow. The portfolio you invest in will be determined by the number of years you can still actively work. If you have a long time horizon before retirement, you can invest in high-risk investments such as cryptocurrency, and stocks. But if you are close to retirement, it is important to invest in conservative portfolios like bonds and mutual funds. You have to take calculated risks to build your retirement saving.

9. Sign Up For Government Benefits

There are various government programs that can ease the burden on your financial savings and it will be good if you consider some of these benefits. In Canada, you are entitled to government benefits such as the Canada Pension Plan (CPP), Guaranteed Income Supplement (GIS), or you can consider Old Age Security ((OAS). Once you are approaching retirement, you can learn more about these benefits and how you can apply for them. They will help sustain your retirement savings.

10. Get A Financial Advisor

The contribution of a financial advisor to your retirement planning cannot be overemphasized. There is a myth about having a minimum retirement saving before meeting with a financial advisor. This cannot be further from the truth. You can meet with a professional once you decide to have a retirement plan. They will help with planning your budgets pre-retirement and post-retirement. They will also account for inflation in your retirement plan. This will help you avoid short-changing yourself.


The amount of money you should have to retire comfortably in Canada for an individual is around $800,000.

The best retirement plans in Canada are Defined benefit (DB) plans, Registered pension plans (RPP), Registered retirement savings plans (RRSP), Tax free savings accounts (TFSA), Canada Pension Plan (CPP) and Old age security (OAS).

You want to save around a minimum of 10-15% of your pre-tax income for retirement in Canada.

You should have around $800,000 saved by retirement age in Canada for a comfortable retirement lifestyle.

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Written by:

Jim Pan, CFP, MFA-P

Jim is a dedicated, fee and advice only independent Certified Financial Planner with a focus on supporting healthcare business owners during their crucial growth phase. His expertise lies in offering comprehensive solutions to minimize taxes while embracing a holistic approach. With a career spanning back to 2010, Jim has established a strong presence in the financial industry. He proudly holds a range of designations, including Certified Financial Planner (CFP), and Master Financial Advisor - Philanthropy (MFA-P). He is currently pursuing additional designations and qualifications to better serve his clients and community. Beyond his qualifications, Jim is a member and an esteemed participant in the Million Dollar Round Table (MDRT), an exclusive global association comprising the top 1% of financial advisors. Jim's commitment extends to the community, where he spearheads numerous charitable fundraising events and plays an active role in enhancing the well-being of others. Additionally, he has contributed significantly by serving on the board of the Canadian Mental Health Association in Vancouver. Currently, he volunteers with Junior Achievement of British Columbia (JABC) to present personal finance topics to youths.

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