Four Retirement Planning Mistakes To Avoid

Whether retirement seems a long way off or you’re eagerly looking forward to it, it’s essential to make sure you avoid retirement planning mistakes!

I’ll cover these four mistakes to avoid:

Not having a proper retirement plan.
Not planning enough.
Underestimating how much money you’ll need.
Not entirely using your TFSA.

Not Having A Proper Retirement Plan

While some people are lucky enough to have lavish pensions indexed to the cost of living to look forward to, that’s not the case for most of us! So we need to put into place a proper retirement plan that covers two critical aspects of retirement:

What kind of retirement do you envision? Something with lots of travel or something spent quietly, with time to practice hobbies and volunteering?
What kind of funds will you need to support the retirement you envision?

Not Planning Far Enough In Advance

You should start planning and saving for retirement as soon as you start your first job. The earlier you start putting money away, the more time it has to grow. If you need to decrease your savings once you have children or other expenses, having a solid start on your retirement savings will pay off in the long run!

Underestimating How Much Money You’ll Need

It can be tricky to determine how much money you’ll need. Hopefully, by the time you retire, you’ll have paid off your mortgage and car loans and be finished contributing to your children’s higher education. So those are some costs you’ll no longer have to deal with. But you may have new costs, such as paying for private health care benefits (as you won’t have an employer to provide them) or eating out or travelling more, to account for.

Not Fully Using Your TFSA

A TFSA is a fantastic way to save for retirement. While you don’t get a tax deduction for contributing to your TFSA, all your growth is tax-free, and any money you withdraw (whether during your retirement years or earlier) is also tax-free!

There are also two other great benefits to the TFSA:

Any federal income-tested benefits and credits, such as Old Age Security (OAS) benefits and the Guaranteed Income Supplement (GIS), will not be reduced due to the income you earn in your TFSA or money you withdraw from your TFSA.
Income earned in your TFSA account or money you withdraw from your TFSA will also not affect your eligibility for federal credits, including the goods and services tax/harmonized sales tax (GST/HST) credit or the age amount.