How to plan for your retirement

You can plan your retirement following these 4 steps:

1) Determine the age at which you retire
2) Estimate what you’ll need in retirement
3) Identify the sources of income you can count on at retirement
4) Determine your need for savings

You want to plan your finances for retirement, but you do not know where to start? Key steps to realize your future plans.

1) Determine the age at which you retire

Perhaps you are just starting your career? If this is the case, ask you to already determine the age at which you retire may seem a little far-fetched a year!

This stage is however essential to financial planning for retirement because it will determine the time you have to spare and ensure your financial security in retirement.

Just see this as a first step in achieving that goal could be revised in the course of your career based on your financial capabilities and personal and professional aspirations.

2) Estimate what you’ll need in retirement

According to experts, it will take you about 70% of your average gross annual income of the last three years of work to maintain your retirement standard of living.

For example, for an average gross annual income of $ 30,000, you will need $ 21,000 at retirement.

Warning! This “70% rule” is not universal. We have to be logical! Indeed, if your gross annual income is less than $ 30,000 and you have to pay rent or a mortgage, it is highly possible that you need more than 70% of your average gross annual income over the last three years for get to make ends meet.

By cons, if you earned higher incomes than average, for example, $ 80,000 a year, you could get by with a rate of 60 or 65%.

The 70% rule is not universal, but at the very least, considering that work-related expenses will decline or disappear.

At retirement, you will pay less tax, you will not be contributing to the Québec Pension Plan (QPP) or the pension fund your employer and your family burdens should be reduced. By cons, you will pay more in health care, life insurance premiums and social and recreational activities.

Remember that you will have all your freedom to indulge in your favorite activities. Apart from walking in your neighborhood, everything has a price, even TV!

3) Identify the sources of income you can count on at retirement

70% of the income you will need in retirement will come from both public plans and your personal savings.

The proportion of each of these revenue sources will vary according to the age at which you retire and your career average income.

Public plans

Public plans offer basic financial protection. The retirement pension from the Régie des Quebec Pension Plan (QPP), the pension of the Old Age Security (OAS) and the Guaranteed Income Supplement (GIS), if you are entitled to it, are the three sources of income public that will fund your retirement.

Combined together, they will give you 43% of your career average annual income if that income does not exceed $ 40,000. If your income is high, the coverage offered by public pension is reduced because the government benefits are capped at a certain level.

For more information about public programs, you can visit the websites of various government programs:

– Retirement pension QPP

– Programme of the Old Age Security and Guaranteed Income Supplement

Personal savings

If you want to retire counting exclusively on public plans, you may experience tomorrows disillusioned. In other words, forget your fishing camp journey in Spain and part of your everyday golf …

To live a retirement that meets your ambitions, you must necessarily deal with your personal savings: including RRSPs, TFSAs, non-RRSP investments and, for the lucky workers, with the fruit of your contributions into a pension plan offered by your employer.

4) Determine your need for savings

Once you have estimated your projected income (income sources) and you will have them compared with estimated requirements (70% of your average salary for the last three years of work), you will be able to determine your need for savings.

At first glance, the equation is simple: 70% of your average salary for the last three years of work – predictable income = need for savings.

But that’s not all, you also forecast inflation that will apply to your amounts saved. Inflation is the increase in the prices of goods for consumption. In 25 years as an inflation rate of 3%, an expense rather represent $ 10,000 $ 20,938, more than double.

You must also consider the number of years that will last your retirement. Life expectancy continues to increase. It is therefore possible that you spend as much time in retirement at work.

How to choose car insurance

Are you planning to buy a new car? Before you start, carefully inspect automobile insurance contracts that you will subscribe. And if you already own a car, try to modify your current contract. For it is possible to make big savings by changing the formula or insurers.

Make use of competition

By regularly changing your contract to suit your situation and your vehicle, you can pay less or be better covered. To play competition – every two years – two solutions: via an internet insurance comparison sites or call a physical broker.

These specialists will offer the most suitable offers to your profile, classifying them by level of premium. However, be careful to not focus on price alone because the cheapest insurance is may not necessarily be the best. Always compare the price / quality ratio, that is to say, the guarantees offered for the price, including all additional costs of the essential options to subscribe.

Adapt your contract and your deductibles levels

To select the most suitable contract, first carefully examine your situation and your vehicle. There is no point, for example, to ensure an old car for all risks because it will cost too much for the proposed guarantees. Similarly, if you drive several hours a day your new vehicle, it is appropriate to take the most important coverage.

There are mainly three contract forms, which fit together in one another: Insurance “all risk” includes the options of “third extended”. Also note that all contracts are customizable, and allow you to add options, at an additional charge. Finally, note that in order to lower your rate, you can still play on the competition in the market. More the amount, the lower your insurance rates will be. However, this means that you will have to shell out more money in case of disaster.

Basic contract: third-party insurance

If you drive your car or just has a very low value to the Argus, third party insurance is often more than enough. It incorporates the minimum required by law, ie liability, which covers damage to your potential victims in case of accident (passengers, pedestrians and other drivers), and insurance defense remedy for any legal problem. To this solid foundation, it is imperative to add body driver warranty insurance (paying option in some formulas). Without it, you would not be covered against any damage to your person if you were driving and victim of a no-fault accident. Finally, choose a contract that pays a substantial death benefit if you die in an accident. Some insurances are limited to a few thousand euros, an amount largely insufficient. Prefer those that provide for a capital of at least 200,000 euros or 400,000 euros, if you have children of school age.

Contract more protective: third extended

This type of insurance is recommended for newer cars, or if you use your vehicle regularly to get to your work every day, for example. All formulas third extended integrate basic thirds formula, with the added bonus of helpful additional options: for example, the warranty failure and accident, which offers a breakdown service and repair in case of puncture, mechanical failure or breakdown of your vehicle following a collision. Note that depending on the options chosen, the cover can be variable. Some contracts only work provided that you are the victim of a disaster to 30 or 50 km from home. If you make short trips, so they are useless. Better to opt for a guarantee “0 km” which will pick you up in front of you. Other shades: the ice breaking option allows you to change a broken windshield, except that all insurers may not include the side and rear windows, mirrors and headlights and taillights. Finally, be aware that some third-party extended warranty packages include “theft”.

Contract All Risk: comprehensive cover

These contracts are preferable if you own a very new car, of high value or if you drive every day. Indeed, all risks insurance covers you against all risks and above all ensure your vehicle, even if you are declared responsible for the accident. Thus, they integrate third-party insurance, a guarantee failure and accident, but also theft and fire. In case of disaster, they almost always offer a replacement vehicle during the repair time of your car. The flight warranties differ by type of contract: some only protect against theft of your vehicle, others against robbery. In some cases, this may also provide a guarantee covering theft of personal belongings stolen from the vehicle or trunk. Finally, if you are the victim of a serious accident and your car is irrecoverable, it will be returned to its replacement value in the 6 or 24 months subscription contract. Again the differences are significant: the most protected contracts are considerably more expensive than those that provide for all risks with the minimum guarantees.

Advantages of being financially free

How many months could live without reducing your level of spending today if you’d stop work? To answer the question simply make a few calculations, but I’m sure you already have a ballpark figure in mind. The answer will give the measure of your financial freedom, it’s your safety net to deal with unforeseen or to take important decisions in your life as a business undertaking or seek a career change.

When your financial freedom is small, just six months, so is your safety net and the unexpected can make the difference between having or not having money to maintain your standard of living or having to change drastically. The pressure of having financial freedom is huge and limits your ability to act. If you rush and you’re wrong, if you are kicked out of the company or if you have any problems, your finances will not be able to withstand the stake and always live with the fear of “what if …”.

Things change when your financial freedom is several years. The pressure decrease and you are freer. But do not confuse financial freedom to have more money. Financial freedom goes further. The money will allow you to buy things such as one or more houses, cars and even yachts or private jets. But you may have many other expenses associated with your way of life. Why so many celebrities who earn much money but also have major financial problems and big debts. Think Michael Jackson or elite athletes who went bankrupt despite making large fortunes during their career.

The benefits of financial freedom

Being financially free is better than having a lot of money because it means having the freedom to choose, to do, to decide … These are the ten great advantages of having financial freedom.

Work on what you like

We spend at work half a day, almost more time than at home if we add and subtract commuting hours of sleep, and its impact on our life and perception of happiness is huge. Yet many still come reluctantly, forced by the need to earn a salary at the end of the month and with the fear of being fired. When you have financial freedom is very different thing.

As you know you have a financial cushion can work only on what you like and you’re not obliged to say yes to all projects or work that you have. In other words, you become more selective because your finances allow you to be and you are also aware of the work that you really like that you can stop thinking about it. The work stops being an obligation and becomes a motivator.

You enjoy more professional success

When you have more financial freedom you are less yourself and your fears. E more proactive in working beef because you’re not thinking about what can happen if you screw or pleasing your boss, but do the best you know and give the best of yourself. Even if you are your own boss you will see how your ideas flow more and better.

Live where you want

When you have financial freedom, fear of change disappears. If the opportunity to travel to another country for work arises, you can take it up because you have a safety net that supports your decisions. Your current job does not determine where you live.

You have no stress or fear of losing your job

When you have financial freedom you depend on your job and this is an added burden that can weigh as a slab. If you lose your job or the company closes have little room to put things right and you’ll soon see everything very black.

When your financial freedom is several years old, you know you have time to search and even to train you and change sectors. In other words, the fear disappears.

You can jump into your dreams

Undertaking, take a year off to find yourself, changing professional sector … Financial freedom allows you to pursue your dreams and find what really matters in life.

You have secured a golden retirement

Have financial freedom means being able to maintain your standard of living without income and this also affects retirement. You can build the retirement of your dreams because you know exactly what you need and why you walk part of the way through each day of freedom that you keep winning.

You can take holidays when you choose

Financial freedom allows you to disconnect from work at any time and do it as you like. If you need a year off, you’ll have it.

It gives you confidence that your network security is also transferred to labor and professional level.

Never suffer money problems

As financial freedom is much more than having money, this is no longer a problem. You no longer look your checking account because you know your financial cushion, but the slab may be assumed to have no control of your finances.

You guarantee the future of your children

If you do your calculations well, your children will be part of your financial freedom and be able to study how and where they choose. You can give them the best education and make sure they are all open alternatives.

But most important it is to be lived with a model of healthy and sustainable management where capital money is not an end but a means and where there is no room for over-indebtedness, among other things.

Enjoy life more

In the end, the short financial freedom root fears related to money without this concern in your mind can focus on what you really like and what you care about. The effect is to enjoy life more because you’re not thinking about money or what will be in economic terms. If your mind is free to dream, it is also to be happy.