It's Your Money  

No-retirement plan blues

Are you into your 50s with no retirement savings to speak of yet?

If so, you are not alone.

I read somewhere recently that only 54% of “boomers” (currently those in the 55-75 age range) in the United States have any retirement savings at all. With Canadians unhealthy appetite for debt, many here at home are in a similar position.

While not an ideal situation, there are still plenty of things you can do. Sinking to despair and “giving up” because it is too late to start is not the answer. Instead, here are a few things you can consider doing to get back on track:

Get past the fear stage and reframe your thinking.

Instead of dwelling on past decisions or wishing you had started earlier, you need to think positive and take comfort in taking on action on the things you can control.

Any savings put away today is better than nothing and puts you farther ahead than you were the day before.

Look for ways to generate more income.

Do you have an opportunity to work a bit of overtime at your job? Maybe there is a way to attain a higher year end bonus or work towards a raise?

Maybe a side-business can generate some extra cash flow? And if you do earn some extra income, put 100% of it against debt or into your retirement savings instead of treating yourself for your extra hard work.

Reduce your expenses aggressively.

You need to take a hard look at your budget and where you spend money to see what can be trimmed. This includes both day to day spending as well as bigger ticket items.

Saving an extra $10 a day starting at age 50 translates to an extra $87,000 in your nest egg at age 65 (assuming six per cent rate of return). And don’t increase your debt load for any reason.

It is time to cut the kids off.

I know how much you love your children but if they are going to college or already grown adults, it is time for them to pay their own way.

If you are behind on your own retirement savings, this must take priority. As much as your heart is in the right place by trying to help them, the lessons they will learn now about managing money and taking on debt will help them for the rest of their lives and they will be less likely to have to support you in your later years.

Rethink your retirement plans.

This could mean working for a few extra years or even working part-time in retirement. Working for a few extra years has huge benefits.

Not only will you have some extra income to invest, you will delay dipping into what you do have saved and can also delay taking government pension programs for a few years increasing the amount you will receive.

If you find yourself behind on your retirement preparation, the single most important thing you can do is to create a comprehensive financial plan. I regularly hear people say that they “don’t have enough money saved to setup a financial plan,” but this makes no sense at all.

A proper plan will outline where you are today, what your future goals are and detail the steps you need to take to get there. No matter how dire your situation feels, the sooner you take action the better off you will be.


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About the Author

Brett, designated as a chartered investment manager and certified financial planner, is the regional director (Okanagan) for IG Wealth Management.

In addition to his “day job," Brett was appointed to the board of directors of FP Canada (formerly FPSC) in 2014, named as the board’s vice-chair in 2017 and took over as board chairman in 2019. 

Brett has been writing a weekly financial planning column since 2012 and provides his readers with easy to understand explanations of the complex financial challenges that they face in every stage of life.

Enhancing the financial literacy of Canadian consumers is a top priority of Brett’s and his ongoing efforts as a finance writer and on the regulatory side through the FP Canada board focus on this initiative.   

Please let Brett know if you have any topics that you’d like him to cover in future columns by emailing him at [email protected]

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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