How to Start Planning for Retirement When You Have No Clue What to Do

Step One: Decide How Much Income You Need

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Step Two: Factor In All Sources of Income

  • Government retirement funds?
  • Employer pension plans?
  • RRSPs or TSFAs?
  • Savings accounts and mutual funds?
  • Other sources of income (inheritance, contributions from your family, etc.)?

Step Three: Calculate Your Time

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Step Four: Tweak the Numbers

  • Can you sell your house and downsize your mortgage payments? You could invest the difference in savings. Is it possible that a smaller house, a different location, or a different design (e.g., few stairs) would be better to help you reach your retirement years?

  • Can you sell your car for something more modest and affordable? Transportation and car maintenance are large expenses. If you can downgrade your car and rely on other modes of transportation, you'll cut a large chunk out of your current expenses - which you can send directly to retirement investment options. Even downsizing to a smaller, more fuel-efficient car would be a good idea!

  • Do you have a realistic idea of your current and retirement lifestyles? Right now, you may be used to spending a certain amount of money on dinners out or travelling. Will those numbers remain constant as you get older? Can you be happy without those expenses? Whatever cuts in spending you can make in your lifestyle will make a big difference.
Step Five: Get Informed

    Service Canada where retirement calculators and overviews of the various government programs are available to you.
  • Canada Revenue Agency and their explanations about RRSPs and the benefits to you.
  • The Government of Canada TFSA website that shows how they work

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