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5 ​Tips for Retirement Planning for Late Starters

With so many factors beyond our control, saving for retirement can sometimes be seriously stressful. That stress is higher still for those people who have fallen behind on saving for their future, and don’t have as many decades left to build up their wealth.

While leaving it late is definitely not ideal, you don’t have to despair if circumstances or inattention have cost you time to grow your retirement savings. Here are five strategies that can brighten your long-term savings outlook and help put you on a path to a comfortable retirement.

Cut costs as much as you can, and deal with any debts

You won’t need to worry about saving as much for retirement if you can spend a lot less money when you get there, and even before, so look for effective ways to slice your spending. This could mean downsizing your home to save money on mortgage payments, or switching cities in search of a more affordable living option. You may even be able to turn a profit on such exchanges – the extra cash is the perfect thing for topping up your nest egg and boosting your investment power.

Cutting costs should also mean striving to eliminate hefty payments and costly interest charges by wiping out all non-mortgage debt as quickly as possible. You can’t make the most out of saving for retirement if you owe too much money to others. Deal with your debts, then focus on paying yourself.

Catch up on missed contribution room for RRSP and TFSA accounts

If you’re late to the retirement planning game, you’ve probably got a pile of unused savings space waiting to be taken advantage of. Canadians benefit from tax advantages when contributing to a registered retirement savings plan (RRSP) or a tax-free savings account (TFSA). We accrue contribution space for these accounts on an annual basis and can catch up on unused space when we’ve got the money to do so. There’s no better place to start saving for retirement than by setting up RRSP and TFSA accounts and filling as much available contribution room as you can.

Reduce risk with your investments

If you don’t have many years left before retirement, it can be tempting to take big swings with your money in the hopes of making up for lost time. Unfortunately, most opportunities for high growth also come with higher-than-average risk, which late starters can ill afford. Growing safely is more important than growing quickly if you’re closer to retirement, because there’s not enough time to overcome missteps and risky bets like there was when you were in your 20s and 30s. Stick with safe investments that produce steady gains, and mitigate risk by building a balanced, diversified portfolio.

Make sure you have adequate insurance

It may seem counterintuitive to spend money in order to help save money, but that’s exactly what insurance is all about: paying a smaller amount to avoid the risk of having to pay a huge amount in the event of a serious and costly incident, whether it affects your vehicle, your home, or your health (and your ability to earn a living). Consider bundling your policies to save on costs or look for better rates through group insurance offers. With complete, adequate insurance, you’ll avoid having to dip into retirement savings to cover any large, unexpected, and unwelcome costs.

Put you and your partner’s future ahead of saving for your kids’ schooling

Most parents make it a priority to put money aside for their children’s post-secondary studies. It’s a laudable goal for many reasons, not the least being that up to a point, deposits into registered accounts benefit from a federal grant that swells your education savings.

Remember, however, that your sons and daughters will have access to multiple avenues to help fund their post-secondary education, from grants and scholarships to summer jobs and favourable student loans. They’ve also got tons of runway to tackle student debt. You, on the other hand, might not have any outside help financing your future. If you want to ensure a comfortable retirement, the best people to fund it are you and your partner.

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