It's never too late to start

You are never too late to the game for retirement planning!

If things were ideal, you would start saving for retirement in your 30s or 40s, or possibly even sooner. But the reality of it is that, in today’s environment, for many it simply isn’t a possibility.

If one day you realize that retirement is far too close for comfort, you may wonder if it’s too late to start. I firmly believe that it’s never too late. For someone in their 50s, you could have 15 years or more to prepare. If you are willing to get serious about it, there is still time.

Your income level is likely at its high point in your career, ideally with some room to grow. You have unused RRSP and TFSA contribution room, and with some effort and creativity, I can help you fill those up. Fifteen or twenty years of tax-sheltered savings, and annual tax refunds, can go a long way in funding your retirement.

Your children should be on their way to some form of financial independence, and you should work toward paying down your mortgage. In the low interest-rate environment that we have been in for more than 10 years, this is somewhat less critical than it has been in the past, but the lower the mortgage you take with you into retirement, the better.

You just need to apply a bit of discipline to save and don’t give up. Despite the recent market ups and downs, a properly diversified portfolio will produce you consistent long-term returns.

Once you are in your 60s and 70s, there are additional challenges for retirement planning. You will want to be particularly careful about taking on too much risk in the hopes of a near-term windfall. There are other potential options to create an income stream that you may want to consider.

An annuity can provide you with income for the rest of your life. It can be a very effective product for people who are in good health and are worried about outliving their money. Life annuities purchased outside of a registered plan can receive favourable tax treatment, as only a portion of the income is taxable.

Any concerns with annuities regarding premature death resulting in leaving little or nothing for your family or heirs can be addressed by insuring the annuity for a period of time that you choose. With this option, it is possible to fully protect your original deposit into an annuity, allowing the original deposit to go to the heirs of your choice upon your death.

An all-to-common position for people at this stage of life is to be “asset rich” and “cash poor”. In these cases, you can potentially look at the equity in your home as a possible income stream. There are a number of ways to accomplish this including down-sizing your home, a secured line of credit (interest rates are currently very low), or a reverse mortgage (more expensive than a secured line of credit, but easier to obtain).

If you have a large permanent life insurance policy, it could also potentially be used as collateral for a secured line of credit.

The reality is that if you haven’t been saving, you may have to work longer, spend less, and budget more aggressively. But before you give up on your retirement dreams, book a meeting with me, and we can look at all of the options available to you. There may be more options than you realize.

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For more information, or to review (or start) your retirement plan, book an online meeting with me.

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