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4 Tips For Retirement Planning: The Best-Kept Secrets

Optimize Team October 21, 2021

Whether you are approaching retirement age or not, it’s great to be aware of your preparation options for life after work. Sure, you have heard the usual things — RRSPs, TFSAs — but there’s more for you to be aware of. Here are four of the best-kept secrets to a financially secure life after work.

 

  1. Part-Time Work Can Equal Six Figures During Retirement

If your retirement savings are a little smaller than you hoped, consider working part-time during your golden years. Now before you disregard that notion, take a moment to breathe in the following. Let’s say you make $20,000 at your part-time job. That’s roughly what you could expect from the $400,000 investment portfolio. To be reiterate, that little part-time job is the financial equal of a $400,000 portfolio.

 

  1. You Are Not at All Behind  

Consider someone who reaches 55 with a paid-off condo and $100,000 in savings. That person can expect their savings to produce roughly $4,000 or $5,000 a year in returns. Since that person is too young to collect Old Age Security and CPP, retirement at 55 seems very impractical.

But let’s take a look five years down the road. Say this person really hunkers down and contributes $10,000 a year to their retirement fund during that period (and achieves a 7% annual average return) their savings double to $200,000. That can generate roughly $8,000 to $10,000 a year in income for as long as they grace the earth. At the appropriate age, they can also start collecting Canada Pension Plan. Combine those sources of income with part-time work and retirement becomes a viable and secure option.

 

  1. The Government Provides More than you Think

CPP and Old Age Security is on the rise in 2016 and both will provide you with a combined total of roughly $1,660 a month (if you’ve worked in Canada your entire life and retire at 65). If you span that out over a year, that’s just a shade lower than $20,000.

 

  1. Free Money Up for Grabs?

Talk to your human resources department to make sure you’re not missing out. Publicly traded companies typically offer employee stock ownership plans with an employer match. If you buy let’s say $80 of your company’s stock each month through such a plan, your employer will contribute an additional $20 a month — an instant investment return of 25 percent. Other companies offer retirement plans in which the company matches your contribution dollar for dollar.