It’s never too late for couples to make adjustments in saving for the future
A lack of money and time are the top two reasons that couples give for being unable to save for retirement. The amount of money needed in savings goes up and down throughout their lifetime. Proverbs 21:5 says, “The plans of the diligent lead surely to advantage, but everyone who is hasty comes surely to poverty.”
It’s never too late for couples to adjust their spending and saving plan in order to protect their future—ensuring a safe landing into retirement.
20 years from retirement
If you have children, the 20 years from retirement time period could look very different, depending on whether or not you are saving for their education. If you had your children in your 20s, you may be a couple with an empty nest who is looking to spend some money on yourselves.
As you get closer to retirement, you may have a better sense of what you might want to do in retirement and how much it will cost for you to get there. This is a crucial time for you and your spouse to adjust spending and saving habits with a view on the future!
If a couple has a little to save:
- Put away what you can. Even if it’s only $100 a month, this is a good habit to maintain and you’ll be surprised at how quickly your money can grow.
- Set clear guidelines in your home for what you can afford to pay for your children’s education. Create a plan with your children before they get to college/university age.
If a couple has a moderate amount to save:
- Avoid “midlife crisis” splurging.
- Stick to your budget – especially for those big-ticket items like a vehicle.
- Consult with a financial representative to make sure you are receiving the best after-tax returns on any investments.
- Consider purchasing permanent life insurance.
If a couple has a lot to save:
- Make additional “catch-up” contributions to your RRSP.
- Guard against becoming accustomed to living the “good life.” Higher expenses will quickly eat up your income for retirement.
10 years from retirement
This decade is when many couples really focus on saving for retirement. It’s possible that as much as 80 per cent of retirement savings get set aside during this time. Generally by this time, couples should be increasing their savings rates and eliminating their debts.
If a couple has a little to save:
- You may have to consider working a few years beyond age 65. This will give you a chance to boost monthly Government benefits, build up your RRSP account and reduce the period you’ll have to rely on retirement assets.
- You may have figured out how to live on less, but don’t stop saving for retirement—and don’t give up if you haven’t started. Any little bit saved will help!
If a couple has a moderate amount to save:
- Pay off any outstanding debts.
- Consider making a “catch-up” contribution to both your and your spouse’s RRSPs.
- Become more conservative with and protective of your savings and investments.
- Purchase long-term care insurance to help ensure a nursing home stay doesn’t deplete your assets.
If a couple has a lot to save:
- Consult with a legal advisor to make sure your estate plans are set up and are flexible enough to withstand tax law changes.
- Speak with your financial representative about investments in addition to RRSPs and TFSAs.
- Consider leaving a legacy gift.
We know that most Canadian couples are not saving enough money for their retirement. On average, $149,200 is the amount that the typical “baby boomer,” aged 60 to 62 with an RRSP plan, has saved for retirement.
In 2011, from 700 people surveyed:
- 47% said they have not saved enough to retire.
- 45% said they are not giving as much as they would like.
- 55% said they would prefer to speak with a professional advisor for advice to build a financial plan.
Although a lack of time is a top reason that couples give for not planning for retirement, do not be discouraged—there is still time. You can start by adjusting spending and saving habits immediately. You and your spouse will be pleasantly surprised at how quickly your savings will add up so that you can land safely and confidently into retirement.
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