A strategic savings plan is key to victory
The two conference champions competing in this Sunday’s big game have invested extensive time and effort analyzing, developing and perfecting the plays that led to their season’s success. Applying similar preparation and strategy toward developing a savings game plan is key to achieving your retirement goals.
Many news reports and surveys suggest that people are not saving nearly enough for retirement. Financial professionals define “enough” as the ability to replace 75–80% of your preretirement income. It’s nice to have a general benchmark like that to start with, but does it apply to you?
Why you might need a LESS aggressive game plan
Depending on how you envision your life in retirement, your anticipated expenses may be much less than they are today. In addition, you may continue to earn money in retirement to help offset expenses. Here are some reasons you may need to save less than the general benchmark indicates:
- You have a mortgage that you plan on paying off before you retire
- You plan on downsizing to a smaller home, with a much lower mortgage payment
- You plan on relocating to a less expensive city
- You plan on working part-time during retirement
- You anticipate other sources of income, such as investment/rental properties
- You expect Social Security benefits will provide adequate income for your needs
- You will no longer need to financially support children or other family members
- You anticipate good health, with no unexpected medical or long-term care expenses.
Why you might need a MORE aggressive game plan
On the other hand, with retirement potentially lasting 20 years or more, you may want to be more aggressive with your retirement saving goal. Here are some reasons you may need to save more than the general benchmark indicates:
- If you have a mortgage, and you plan on continuing to make payments during retirement
- You want to travel extensively or purchase a second home for an occasional getaway
- You expect higher healthcare expenses
- You anticipate needing long-term care at some point
- You plan on starting your own business and will need to provide funding
- You will need to financially support children or other family members
- You believe that your Social Security benefits will be reduced or inadequate.
Call the plays
There are many variables involved in determining how much you should be saving for retirement. Here are some important things to think about:
- How much you have saved so far
- Desired lifestyle in retirement
- Projected rate of return on your savings
- Rate of inflation in the future
- Uncertainty about the future of Social Security benefits and Medicare
- How long you expect to live
- Future cost of healthcare and medications.
Log into your online CRA account portal to find several tools and resources to assist you with developing your retirement savings game plan, including a retirement income estimator and retirement planning calculator. These and other similar tools are hypothetical in nature and are not predictions or guarantees. To access your online CRA account portal, click here.
