Plan to Retire One Day? Make Sure Your Financial Plan Measures Up

Retirement is one of life’s most important financial goals. While it’s easy to envision what you want that lifestyle to look like, it takes a whole lot of planning and saving to turn the dream into reality.

One of the most successful ways to achieve an ideal retirement is to have a financial plan, yet a new report by BMO Wealth Institute reveals some alarming news. In the past seven years, it seems, there’s been a dramatic decline in the number of Canadians who have a written financial plan − from 58% in 2008 to just 38% in 2014(1). Their excuses? They don’t need one, they haven’t gotten around to it, they think it’s too early to prepare, they don’t have an advisor, or they just haven’t given it much thought.

With more people retiring early and living well into their 80s and 90s, that’s 30 to 35 years of long-term planning. Clearly, something’s gotta give.

Regardless of what age and stage you’re at, a robust financial plan can help you achieve the lifestyle you want once you leave the workforce. It’s all-encompassing to include investment and tax planning, retirement expenses projection and income needs analysis, life and health insurance needs, government and employer pension benefit review, long-term care needs assessment, and estate planning. And it’s realistic, evolving as you do to reflect any changes in your life, expectations, financial situation and goals.

Here are some tips to help you design a financial plan that’s right for you:

  • Seek help − Professional advice is paramount when calculating financial projections and researching investment information. And it’s critical when dealing with complex tax and estate issues. Financial professionals also act as a sounding board for your questions and concerns, ensuring you’re comfortable with your decisions (especially during times of heightened market volatility) and keeping you on track with your financial plan.
  • Prepare – Put pen to paper by detailing your living expenses and spending habits to ensure your current spending isn’t Set up a continuous savings plan using whatever savings vehicle that is appropriate for your situation, whether it’s a Registered Retirement Savings Plan (RRSP) or a Spousal RRSP. And make the most of a Tax-Free Savings Account (TFSA) to save and invest tax-free.
  • Think young − With the life expectancy of Canadians increasing, your retirement might not only start earlier than expected but it might also last longer. Keep saving until you have a significant pool of assets that will generate the income you need to live a comfortable retirement, regardless of when that day arrives.
  • Be flexible − Your financial plan is not set in stone. Meet with your financial professional at least once a year to review your retirement readiness, as well as any time there are significant changes to your personal or financial situation.

(1) BMO survey conducted by PMG Intelligence between July and September, 2014 with a sample of 835 Canadians. Overall margin of error for a probability sample of this size is +/- 3.39%, %, 19 times out of 20. Unless indicated otherwise, all survey results are from the BMO Wealth Institute “Canadians and the New Retirement” survey conducted by PMG Intelligence.

This blog post is for informational purposes only and is not and should not be construed as, professional advice to any individual. Individuals should contact their BMO representative for professional advice regarding their personal circumstances and/or financial position. The information contained in this report is based on material believed to be reliable, but BMO Financial Group cannot guarantee the information is accurate or complete. BMO Financial Group does not undertake to advise individuals as to a change in the information provided. All rights are reserved. No part of this report may be reproduced in any form, or referred to in any other publication, without the express written permission of BMO Financial Group. ®/™ Registered trade-marks/trade-marks of Bank of Montreal, used under license.