5 tips to avoid outliving your retirement savings

 

Nearly half of Canadian homeowners over 50 believe they will run out of their savings within the first 10 years of retirement, according to an investor education report. Considering that retirement may last 20 to 30 years, a shortfall in retirement savings is becoming an increasingly important financial challenge to address.

 

Whether you are just starting to save, or are already retired, here are five things you can do to help ensure your money lasts.

 

1. Create a retirement budget

 

Start by identifying your spending and lifestyle expectations in retirement. What is essential to you, and what can you do without? Then, list the expenses you know you will have in retirement versus how much income you will receive. Building a retirement budget is an important first step to ensure your savings last.

2. Save more money

 

If retirement is still in the distant future, the best thing you can do is to accumulate more savings while you are working, and let the power of compounding grow your savings.

 

3. Consider how long you will need your retirement savings to last

 

The average Canadian life expectancy is 81 years and the average age of retirement is 64.

 

4. Manage income

 

You want to withdraw enough to cover basic expenses, but you also want to maintain a certain lifestyle in retirement. Everyone’s circumstances differ, but in retirement you will need to manage income from a variety of different sources. Having a plan designed to provide you with sustainable scheduled withdrawals is a step in the right direction.

 

5. Work in retirement

 

Another factor to consider is continuing to work in retirement. Retirement isn’t always a clean break from paid work. In fact, one in eight people over the age of 65 still works³. Keep in mind that there are possible financial implications to working in retirement. The retirement benefits you are eligible to receive from the government, for example, can be impacted.