Have you started planning for your retirement?

A recent survey conducted by the Royal Bank of Canada suggests that almost half of Canadians 55 years or older are not on track with their retirement planning. The same number of people also said their main concern was about money – and whether they will have enough to get them through retirement.

It is never too early (or too late) to start planning and making considerations for retirement. A few things to think about:

How Much Money Do You Need to Save?

Unfortunately, there is no simple answer. Many financial experts suggest that you will need 70 per cent of your working income to live comfortably in retirement. Others say that you should be planning to require 100 per cent of your income, and then go from there. Contrary to these opinions, other experts suggest that we need a lot less money than we think.

How Much of Your Income are You Living on Now?

If you are stressing about needing a high percentage of your working income to live comfortably during retirement, consider how much of your income you are living on now. You may think it is 100 per cent, but if you deduct mortgage payments, commuting costs, costs of raising children, etc. – that percentage is much, much, less.  Did you know that the average Canadian actually lives using about 30 per cent of their income for most of their lives?

Expenses Change

Think about all your current expenses – how many of these will be unnecessary once you retire? Will your mortgage be paid off? Will you still be financially supporting any family members? Odds are that some of your biggest reoccurring expenses will be gone when it comes time for retirement.

Your Retirement Vision

Many expenses will go away, but new ones will arise. Think about your retirement vision and factor in the expenses associated with your plan. Do you hope to do a lot of traveling? Will you be taking on an expensive hobby or investing in a vacation home? Retirement will mean different things to different people.

Consider what you want your retirement to look like and start planning accordingly. Remember that there will be different stages in your retirement, and your needs and routines will change. For example, many people find their costs are higher in early retirement when they spend a lot of time traveling, or exploring new passions. Spending tends to decrease after about ten years, with the exception of expenses related to healthcare.

You may not be ready to start planning the details of your retirement, but it is never too early to start saving for it.