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RRSP strategies for the 50-plus crowd
By
Jim Middlemiss • Bankrate.com
The period between the ages of 50 and 65 is a critical time when
it comes to saving for retirement. ahh
It's the home stretch and a time for investors to
maximize their RRSP contributions, reduce risk in their retirement
portfolio, revisit their insurance needs and actively plan for their
retirement.
"Everyone will have their own retirement date
in mind," says Debbie Ammeter, vice-president of advanced financial
planning support at Investors Group in Winnipeg. "I suspect
that most people don't start thinking about it till closer to retirement.
But 50 is not too early (to start planning).
Set specific goals
The first thing to do is determine where and when you plan to retire.
"That feeds into how you will do it financially. Then you decide
what to do with your RRSP," says Ammeter.
Joseph O'Donnell, an investment representative and
portfolio manager with RBC Dominion Securities in Fredericton, New
Brunswick, says Canadians need to understand how much, if any, they
will draw from government pensions, such as the Old Age Supplement
and the Canadian Pension Plan, as well as their company pensions.
He says studies show that two-thirds of Canadians
must start tapping their RRSPs immediately once they retire "if
they want to live the lifestyle they targeted." For more information,
check out Bankrate Canada's article
on how to estimate your government pensions.
"When you are 15 years or less away from retirement,
it's a good time to go to a financial planer if you haven't already,"
says Ammeter. "What the planner can do is run projections to
model how much retirement income you're going to want."
It's also critical to revisit numbers you set as a
goalpost a few years ago to make sure you're on track. The markets
have under performed the past five years, so you might be under-funding
your retirement plan and need to boost savings to stay on target,
says O'Donnell.
Scott MacKenzie, senior vice-president and a branch
manager at HSBC Securities in Toronto, says investors could be looking
to replace as much as 80 percent of their current income. "That's
typically what people need to continue living the same lifestyle,"
he says.
Keep an eye on asset allocation
When you hit your 50s, it's time to pare down expenses and divert
all your financial resources to your RRSP so you can maximize your
contributions.
A 50 year old who "sticks it out" still
has 15 years before retirement, MacKenzie notes. While it would
be better to have invested as much as possible during your lifetime,
15 years away from retirement is not too late to make a difference,
he says.
Jim Middlemiss is a freelance
writer and lawyer based in Toronto. He's a frequent contributor
to the National Post, Investment Executive and Wall Street &
Technology.
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