This episode of the More Money Podcast is sponsored by the Scotiabank Momentum Visa Infinite card. Earn 10% cash back on all purchases for the first 3 months (up to $2,000 in total purchases).1 Plus, no annual fee in the first year.2 A welcome offer of up to $299.3 To learn more & sign up for the card, click here.
A topic that I think we millennials all need to focus more on is retirement planning. And the reason I think so is that traditional retirement planning seemed like something for older generations, and what we younger generations needed to focus on were debt-repayment and homeownership.
Listen, I know we millennials have a lot going on, but NOW is the time to start planning for retirement, not when we’re nearing it. That’s why I have Ron Haik, Senior Financial Planner & Regional Manager, Ontario at Nicola Wealth on the show to talk all about how to plan for retirement in Canada and as a millennial.
Here are some things we discussed.
Where Do You Even Start?
A common question I get, because planning for retirement either seems too simple or too complicated. Where you start is determining what your retirement will look like. Everyone’s retirement is different, but essentially you need to answer what kind of life do you want to lead after you’ve finished your full-time career. Retirement may still include working, or maybe you want to volunteer, travel the world, or help raise your grandkids. Whatever it is, write it down then figure out how much in today’s dollars you’ll need as an annual income in order to afford that life.
TFSAs Don’t Get Enough Attention
For years, RRSPs were given all the attention. Although they are great vehicles for housing your investments for retirement, TFSAs are great too. They may even be better depending on your situation. You see, with RRSPs, you get that wonderful tax deduction that lowers your tax bill while allowing your money to grow tax-free. But, once you withdraw funds from your RRSP, that’s when you’ve got to pay tax on that money. That also means you need to make sure you’ve included income tax in your retirement budget. With a TFSA, you don’t get a tax deduction when you contribute, but when you withdraw those funds, you don’t have to pay tax either. Things to think about when considering what account type to put your investments into.
Real Estate Investing Is Great, But Diversification Is Better
I recently did a talk on investing for a retreat, and many people there voiced how they were more comfortable with real estate investing because it made more sense to them. You were investing in something tangible and they could wrap their heads around the concept better. Real estate investing is great, but you should never put your eggs in one basket. Real estate should be a portion of your overall retirement portfolio, not the entire thing.
Don’t Set and Forget Your Retirement Plan
Once you’ve built a retirement plan, it’s not something you just put somewhere to gather dust. Your life and goals change, and so will your retirement plan with them. Make sure to revisit your retirement plan every 6 to 12 months.
My Interview on Nicola Wealth’s podcast
Check out this episode of the Wealth Exchange where I’m in the guest’s seat for a change!
Millennials and Money: How to Connect in the Context of Finance with Jessica Moorhouse