The Vault
Will you have enough money for retirement?
by Graham Barber

This is the question that is on the minds of many Canadians. Unfortunately, there is no simple answer. The factors that will determine the answer vary greatly from person to person. It is critical to understand what is important to you, develop a plan and make sure you review it regularly. Some of the factors you may consider are;

1. When do you want to retire?

Obviously, the earlier you want to retire, the more money you will need. If you want to retire at age 60 and you started working at age 20 and we assume you live until age 90, you have 40 working years to save for 30 years of retirement.

2. What do you want your lifestyle to be?

On average, expenses for a person in retirement age are 70 to 80 per cent of their expenses while working. Are you planning on maintaining you current lifestyle in retirement or are you expecting certain expenses to disappear? Do you plan on traveling? It is important to have an understanding of your expenses in retirement and be careful not to underestimate them.

3. How will investment returns and inflation affect your retirement planning?

The higher your investment returns, the less money you need to save. However, it is important to remember, the closer many people get to retirement, the more conservative their investment strategies tend to become. The risk is that some people’s investment mixes are too conservative and they might outlive their savings. Consider keeping some growth in your portfolio as well as investments that generate income. Understanding that your investment strategy should change over time is critical. It is also

important to factor inflation into your plan. Over time, prices will increase and this will have an impact on your retirement lifestyle. By being realistic in your assumptions regarding the rate of your return on your portfolio and the rate of inflation, you’ll be better prepared for a financially carefree retirement.

Although determining how much money you will need for retirement may no be as simple as adding a few numbers, it is not impossible. It is important to give some thought to what you want your retirement to be. Understanding your goal is crucial in developing a plan to reach it. Speak with a financial planner to better understand how best to meet your financial retirement goals.

Scotiabank wants to help Canadians become financially better off by finding relevant, practical and insightful solutions to meet their needs for borrowing, saving and investing. To find out what Scotiabank has to offer Canadians, visit www.scotiabank.com.

The proceeding information was provided by Graham Barber, Branch Manager of Scotiabank, Alcona Branch. The Scotiabank, Alcona Branch, is located at 1161 Innisfil Beach Road, (705) 431- 6116.

The Vault is a weekly series of articles provided by Graham Barber with financial advice and suggestions.