November is Financial Literacy Month

Can you believe we are into November already?

This month is Canada's Financial Literacy Month (FLM), with the focus of: empowering Canadians to manage money and debt wisely; planning and saving for the future; and preventing and protecting against fraud and financial abuse.

We are excited to join in the #FLM2015 conversation on our blog and social streams to share helpful information on saving for retirement and planning for your future.

To kick things off, we will begin by talking about saving for retirement.

Saving for retirement is a long-term process. Early in your career, financial goals like paying off student loans or saving for a house often compete with plans for a far-off retirement. However, before you know it, age 50 creeps up on you and retirement doesn’t seem so far away. Whether you’re in the initial stages of retirement planning or quickly approaching retirement, many people find it difficult to know if they are on track or not. To help you determine if you’re on track to meet you financial and lifestyle goals for retirement, here are a few things to consider:

What’s your retirement goal?
Different retirement lifestyles have different costs. Consider how you would like to spend your retirement and the type of lifestyle you would want to lead. For example, if you plan to take a vacation once a year in retirement, think about what this trip would cost you today. Repeat this process to create a budget, which includes all of your expenses in retirement. This gives you an idea of how much you will need to “pay yourself” each year during retirement in order to have the lifestyle you envision. Think of this as “the price of your retirement”.

Are your savings on track?
Unfortunately, figuring out the price is only one part of the equation. If you are not saving in order to meet your retirement goals, the best planning in the world is still going to fall short. Remember that portions of your retirement income will come from government plans such as CPP/QPP and OAS, as well as company retirement savings plans, such as pensions and group RRSPs. It will be up to you to make up the difference between what those sources provide and what your retirement expenses will be. While the “price of your retirement” can look like an overwhelming (and almost impossible) number at first, if you can save in regular amounts over a long period of time, you will have a good chance of eventually reaching your retirement goal. The key to success lies in a continual cycle of planning, saving, reviewing your plan regularly and adjusting when necessary.

Determine your savings gap
Your plan record-keeper provides access to a retirement savings calculator which can take you through an easy step-by-step calculation to estimate how much you’ll need to save to achieve your retirement income goals. It’s also a good idea to contact a financial planner to help you determine your potential gap.

Some ways that you can make up for lost time and bridge your income gap in retirement are:

1) Increasing your savings: Whether it’s through your group plan, pension plan or personal savings, increasing the amount you save on a regular basis will make a significant difference.

2) Consider more aggressive investments. Adding equities and higher-yield bonds to your retirement savings plan may increase your short-term investment risk, however it may also increase your potential returns over the long-term.

3) Delaying retirement: Every year you delay retirement is one less year you have to fund with retirement income, and one more year you can delay receiving your CPP/QPP benefits. You may also be able to increase the value of your employer pension by working longer.

4) Working part-time in retirement: Even modest levels of income from employment can make a significant difference in bridging the gap between the retirement income you need and the income you’re able to generate.

Join in the FLM conversation on Twitter by following us @Proteus1994 and using the hashtags #FLM2015 and #CountMeInCa