Maybe you picture visiting each continent in your golden years, or of starting a dream business. Or maybe you can't picture your retirement just now but know you should start saving for it.
According to a TD survey conducted in November 2018, 52 per cent of more than 1,600 Canadians over the age of 18 polled admitted that they don’t have a financial plan to support the retirement they want. In the same survey, 43 per cent of those polled said they are confused about retirement planning altogether.
And with more Canadians less likely to have access to a workplace retirement plan and working contract to contract in the gig economy, knowing how much to save and when to start can add to the confusion.
READ: Are you and your spouse on the same page when it comes to your retirement plans?
To help identify some outdated myths around retirement planning, we've compiled some myths to help redefine what retirement means today, and what Canadians can do to feel more confident in their planning.
Myth 1: Most of us will stop working at 65
The reality around retirement has changed, with more Canadians working past age 65 than ever before.
According to Statistics Canada, in 2015, one in five Canadians aged 65 and older (nearly 1.1 million people), said they worked during the year, with more seniors working into their late 60s and early 70s than ever before—that number is the highest proportion recorded since the 1981 Census.
"The definition of retirement is changing. For many of us, work won't just stop at 65," says Jennifer Auld, District Vice President, TD Canada Trust. "People are also living longer, staying more active, and pursuing different hobbies while looking for the financial means to do it or wondering whether to retire at all."
Myth 2: Planning for retirement is solely based on finances
Retirement decisions include both lifestyle choices and financial ones. And since we no longer have a shared view of retirement, determining what's required has become much more complex.
READ: Planning to retire solo? You are not alone
"Before you can decide whether you're meeting your retirement goals, you need to first determine what your current goals are, factor in your lifestyle and then build the financial requirements for success," says Auld. "Even when people have a plan in place, life can get in the way – a big milestone, like buying your first home, or an unexpected event like caring for an elderly parent can come up and set your savings back. Revisiting your plan each year is good practice to make any necessary adjustments."
Retirement planning tips:
To help you feel more confident in your retirement planning, Auld provides the following tips:
- Work with a financial advisor to establish a plan that will help you achieve your vision of retirement.
- Consider automating your savings and investing, with weekly, bi-weekly or monthly contributions, based on what suits your situation best.
- Mix up your savings and investments with retirement savings plans, pensions (where relevant), tax-free savings accounts and non-registered investment accounts to help maximize tax-efficient income-stream options. Start this after you've put aside enough to keep you afloat for 3-6 months in the event of an emergency like an illness or a job loss so that you don't have to dip into these savings and face the tax consequences.
And now that it's RSP season, a little research could even yield perks to saving. You may also want to check out this TD retirement calculator to help identify how much you need to save to adjust your plans.
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