2023-11-14 00:54:45
Planning for retirement is an important process that can sometimes seem complex, especially when you want to ensure you are able to make the most of it.
• Read also: “I am picking myself up today at 75 with nothing ahead of me”: elderly people also caught by the throat
Here are the five traps to avoid presented on the show “À vosaffaires” by financial planner Jean-Sébastien Jutras.
Do not use employer pension plans
“Sometimes there are people who will save on their own and prepare for their retirement, but sometimes their direct employer will offer them systems which will ensure, for example, that they put 4% of their salary and that the employer also puts in 4%.”
“Organizations also allow stock purchases on top of that. People need to realize that these systems exist and put them in place as quickly as possible because it’s a guaranteed return.”
Bet too much on the RRQ and the PSV
“They are important in the equation, but to think that this is the only thing or that this is going to be enough [n’est peut-être pas la meilleure idée].»
“If we look at the old age pension today, it’s $8,300 per year and the Quebec pension board, it depends on how much we contributed, but the average is around $7,000 per year. $10,000 or $15,000 per year is not enough to live the lifestyle we have today.”
Not taking inflation into consideration
“If for example we have a net cost of living of $50,000 per year and we tell ourselves that this is what we will need each year in retirement, our retirement is not tomorrow, so this $50,000 will not have the same value at all in 20 or 30 years.”
“If we take it for granted today that I need $50,000 per year for my retirement, it is guaranteed that there will be a shortage of it. The Quebec Institute of Financial Planning gives a figure per year of inflation that must be considered, often around 2.3%.”
Not considering long-term care
“We have to think about it at least, because today a person can live to be 88 years old, but that does not mean that they are healthy. If, for example, we are healthy until age 82, there are several years when we are not and therefore it costs more.”
“We say to ourselves that our cost of living decreases over the years and this is true during retirement, but often the last 5 or 6 years, there can be a [augmentation]. This must be taken into consideration.”
Not knowing the basics of tax
“Understanding the system we play in is important. If we know the basic functioning of the tax, we will perhaps make different decisions.
“A lot of people tell me they don’t want to touch RRSPs because they say they’re saving money today that they’ll pay back later. That’s postponement and it can be good to do it, but you have to understand it.”
See the full explanation in the video above
1699928331
#pitfalls #avoid #planning #retirement