1. This is the home stretch for retirement saving – are you ready?
You get the biggest bang for your buck from contributions made to a registered retirement savings plan (RRSP) in your 20s, 30s and even 40s because of the decades of compounding available prior to your retirement. But let’s get real. If you have kids and a mortgage, you may well have had limited resources for building your RRSP. In your 50s, it’s time to fix that.
Your mortgage will ideally be paid off while you’re in your 50s – that frees up extra money for your RRSP (in addition to what you’re already contributing). Your kids may be moving out to attend university or college and then begin their lives as adults – there’s more free cash to invest for retirement.
2. Time to make sure you’ve got the best portfolio possible
Audit your portfolio, assessing everything you own. Look at the cost you’re paying to own your investments and, if applicable, look at the fees paid to your adviser. Then, examine the investing results you’ve achieved. Are you getting value for money? If not, now’s the time to change.
3. Time to reduce risk
Your actual retirement may still be a decade or more away, but it’s still time to start paring back exposure to the stock market and increasing your bond holdings. Think of yourself as entering a transitional phase between the stage of life where you’re concerned with accumulating/growing your retirement savings and the stage where your main concern is to preserve what you have.
Worried you don’t have enough saved for retirement? The solution is to contribute more to your RRSP, not to take on more risk in the hope of higher returns.
4. Know where you stand
Catalogue all your expected sources of retirement income – government programs, any pensions you’re entitled to plus your RRSPs and any other investments – and see what you have. If you have an adviser, schedule a special “focus on my retirement” meeting. If not, consult online tools like the GetSmarterAboutMoney.ca RRSP savings calculator.
Feeling completely lost in terms of your retirement planning? A financial planner may be able to help.
5. Remember, you have time to fix any problems
Almost any problem in your RRSP can be fixed to at least some extent in your 50s. Don’t wait until your 60s because that’s too late.