Living in Retirement
Five Financial Principles
Spend Less Than You Earn
It’s easy to get into the habit of spending – to let expectations and wants exceed income, regardless of how much money we make. Studies show when people earn more, they tend to spend more. If your hard-earned dollars are spent before they even reach your bank account, it’s time to take a closer look at your finances.
Be Wise With Debt
Debt can accumulate when credit is readily available. But acquiring debt does carry financial risk and that’s why it should be managed wisely – even for things considered to be “good debts” like your home mortgage, a child’s education or a business investment.
Protect Against Setbacks
We all think it won’t happen to us – until it does. Knowing your insurance options is a good first step toward financial protection for you and your family. Preparing for life’s unknowns is part of a solid financial plan.
Have a Short & Long-Term Plan
Reaching your financial goals requires a short and long-term plan. Short-term planning looks at being prepared for unexpected events that could happen tomorrow, such as a job loss. Long-term planning is about creating a plan to achieve other significant financial objectives throughout life – like, funding for your children’s education and saving for retirement.
Being wise with money isn’t a new concept. But when we view generosity as part of wise money management, it introduces a new conversation about how we can be more intentional about giving – by planning ahead to give back.
4 Tips for Retirement Living:
1. Control Spending – this could be the single biggest step in making sure that you never outlive your money.
Have an emergency fund
An emergency fund helps to reduce the financial stress that accompanies unexpected events. It’s a good idea to include regular savings in your budget until you have saved enough to cover three to six months of living expenses in case of an illness or an emergency.
Determine your budget
Budgeting helps you maintain a spending plan for your money. It’s a way to ensure you have enough money for the things you need and the things you want to save for. Following a budget or spending plan will also help you to manage debt.
- Identify fixed monthly expenses
- Watch your daily flexible expenses.
- Use a budgeting method to help you stay on track i.e. envelope or jar method for cash
2. Understand Government Benefits
The following Canadian sponsored retirement programs are in place to help supplement your retirement income when the time comes.
The Old Age Security benefit (OAS) is available for all Canadian residents at age 65. Since 2016, the maximum monthly OAS benefit is $570.52. In addition, the lowest-income seniors can receive the OAS Guaranteed Income Supplement (GIS), which maxes out at an additional $773.60 per month.
The Canadian Pension Plan (CPP) is only applicable to Canadians who have made contributions and is determined based on how long and how much you have contributed to it. The rate which someone can receive will vary person-to-person, however, the monthly average in 2016 was $629.33.
3. Have an Estate Plan
Wills & Power of Attorney
A Last Will and Testament and Power of Attorney will protect your estate. Your Will is all about passing along property and keepsakes to the next generation – allowing you to leave a lasting legacy. Without a Will, you may miss out on the opportunity to designate your assets to benefit others in the following ways:
- Leave a lasting legacy gift to your favourite church, ministry or charity
- Help grandchildren, nieces and nephews with their education or a down payment on their first home
- Donate an “In Memory” gift from yourself or your spouse to your local hospital or church
- Create a scholarship fund in your name
- Leave a cherished possession to someone who will really appreciate it
|Making a Will|
|Write it all down|
|Hire a lawyer|
|Keep it current|
4. Take Care of Your Health with These 5 Tips
- Keep your mind sharp – read, do puzzles, socialize and keep learning. You could even learn a foreign language or start playing that instrument you’ve always wanted to master. These things will help to keep your brain sharp in retirement.
- Eat well – You will probably have more time to cook and enjoy food. Eating a varied and balanced diet, which includes different types of foods gives you all the nutrients you require. A healthy diet in retirement is good for your heart and your bone health.
- Exercise – retirees who lead an active lifestyle can have fun getting or staying fit in facilities with pools, tennis courts, walking and biking paths and more. Consider joining a gym and talking to a personal trainer who will customize an exercise program just for you.
- Sleep – it’s important to get enough sleep and to rest your body and your mind. Sleep plays an important role in our physical health by allowing the body to be refreshed so you can think clearly and function optimally during the day.
- Look after mental and emotional health – Mental and emotional health includes having positive feelings, a zest for life, and a sense of meaning and purpose. Making mental health a priority in our everyday lives can improve mood, self-esteem and help us build stronger relationships with others.
By taking care of your body you can feel good and enjoy a happier retirement.
We can help you put a strategy in place so you can retire with confidence. Speak with a FaithLife Financial Representative today to get started.