Can you believe we’re in the very last week of the 8-week Financial Fitness Plan? These past few weeks have flown by and I’ve learned so much in the process. This week we’re focusing on retirement and the actionable steps you need to take for a successful retirement plan.
Retirement is an uncomfortable subject for a lot of people, especially among us young folks (…am I allowed to say that now that I’m almost 30)? It’s actually kind of stressful to think about because there are so many unknowns. I mean, we go through most of our lives knowing exactly what we’re doing each day, who we’re going to see, where we’re going, and which rules to follow. Fast forward to retirement and all of this changes.
So rather than relying on vague ideas of what you’re going to do when you retire and how you’ll eventually get there, start with a simple plan. There are no right or wrong/good or bad plans. Just having one and following it will get you much farther than the average Jane who thinks that she’ll just figure it out as she goes.
What will you need when you retire?
You’ll likely have your mortgage, car payments, and all those dreadful loans paid off by the time you retire. So what do you need money for once you retire? Well it depends what your priorities are, but for the most of us our money will go towards:
Home & car maintenance
Healthcare and dental costs
Where to Start
I recently sat down with my financial advisor from Servus Credit Union to talk about my retirement plan and had a mini freak out. The process began with her asking me when I want to retire, if I currently had any retirement savings, and what my retirement plans were. My answers? Ummm… I never want to retire, I probably have a fraction of what I’m supposed to, and I have SO many plans. Not the most promising start to our meeting. I felt so silly telling her all about my retirement plans whilst telling her I had a teeny tiny nit-sized retirement nest egg. She was sweet about it though and told me that it was never too early or too late to start!
The retirement planning process is somewhat hypothetical because you’re throwing guesses as to when you’ll stop working and when you’ll die…. morbid I know. Just don’t overthink it and try to have fun with it! A successful life is all about setting goals, planning for them and crushing them and this is just another step in the process.
Let me start by saying that my husband and I never plan on actually retiring. I mean, we both do what we love every single day and don’t want to have to give that up… ever! That being said, we know we’ll slow down at some point and do have a vision of what we want to be doing when our silver hair starts to show. Just to name a few…
Own a yacht (specifically this one) and sail the world for 6 months out of the year
Own 2 vacation properties – one on the West Coast and one somewhere hot
Able to help our children out if they need it (education, down payment on a house, etc)
My financial planner and I went over a few numbers, like what a yacht costs to own and operate for example. We ran the numbers using this awesome little retirement calculator and the results were, well… unfathomable. As in, how the heck am I ever going to afford this retired lifestyle?
A retirement calculator is a great tool to help you visualize where you currently are, where you’d like to be, and any problem areas that need to be addressed. Here’s a look at my results.
I chose to retire at age 60. I figure since my Husband is 10 years my senior, it’ll give us enough years to travel the world before one of us decides to peace out. Then I had a look at my maternal side and averaged out the age of the women in my family. Most live well into their 90s, so I’m planning to rock it here on this earth for another 30 or so years after I retire.
As you can see, my current retirement nest egg will carry me through one year after I retire. Yup, ONE. See why I had a mini freak out?
Closing the Gap
See that big scary gap between what my forecasted retirement income is and what I actually need? It’s big. Like uncomfortable-food-stamp-living kind of big. So what can I do? And what can you do? Here are some actionable steps we can take right away to set us on the right track:
Start saving NOW! The earlier you start, the more you’ll save and the more inflation will work in your favour.
Set up automatic withdrawals from your checking account directly into your RRSP account each month
Make a realistic budget and stick to it
Set up recurring appointments with your financial advisor to make sure your investments are where they should be and if you’re on track to meeting your goals
We’re in the homestretch of our financial fitness plan already. See? Money isn’t all that scary! Since it’s been a couple of weeks, it’s now time for me to review and make some tweaks to my budget. I can already think of a few changes I’ll be making, like saving more money for baby number two’s education. Along with this, I’ve also booked another appointment with my awesome financial advisor. She and I are going to look over my current investments to see if there might be a better place for them, review my retirement plan, and chat about my overall financial goals.
Now it’s time for the fun part – the rewards! I mentioned my rewards in a previous post which are two-fold. I’m well on my way to achieving my financial goal of setting aside 20% of my monthly earnings towards savings for one full year. The accompanying reward to this is a transcontinental trip and my husband & I are currently deciding where to hit up next! In conjunction with this financial goal, I also set a fitness goal for myself of running the Servus Edmonton 10k in under 1:20. Well, I crushed that goal with a time of 1:05 and cannot wait to fill you in on the details of the race in an upcoming post!
Love, peace & running to the finish line
*This blog post is sponsored by Servus Credit Union. I am a paid ambassador and all opinions are my own. I truly love this company and the resources they have to offer and would recommend them for anyone looking to achieve optimal financial fitness.