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How to build the perfect retirement budget

aadmin — Wed, 17 Jul 2013 10:53:27 +0000

Creating and sticking to a budget in retirement is a lot like sticking to a weight loss plan. A strict diet that requires unsustainable habits and leaves you feeling deprived will not be successful in the long run.

Your budget needs to give you an overall healthier financial lifestyle that is sustainable for your savings and income, but also allows you to enjoy the retirement you have worked for. There are a few things you can do to help make your budget a positive step to the lifestyle you want and not a stressful:

Be Honest

Start with a realistic analysis of what you are spending now and where you are spending it. Use a few bills and credit card statements from different points in the last year to give you an idea of seasonal changes in your spending. The more exact you are with your starting numbers, the better you will be able to predict what you need and what you can change. Simply estimating the percentage of your pre-retirement income you will need in retirement will not give you the whole picture.

Get Help

There are many budget guides and tools available on the Internet. Most banks insurance companies have free budget calculators and downloadable charts available. These resources will also help you make sure you have taken all of your expenses into account. Your budget should be part of your overall retirement plan, and your financial advisor can be a resource for you.

Expect the Unexpected

Include some form of saving in your budget. Whether that is all going to an emergency fund or some of it is going towards a big trip, make sure you have built in some flexibility to your budget. If you need to access money unexpectedly, being able to use what had been part of your retirement budget is preferable to dipping into your larger retirement savings. Between inflation, rising health care costs and volatile financial markets, you want to feel as prepared as possible.

Simplify and streamline

When you have the option to pay monthly without being penalized, take it. It is much easier to plan for predictable monthly expenses than for large or fluctuating bills. Paying monthly for property taxes or choosing a monthly plan for utility bills takes some of the guess work out of your budget. As well, try and keep your bill payments coming from one account or one bank account and one credit card. The more places the money is taken out of, the harder it is to track.

Stick with it

Here is that diet analogy again. While dieting, you track your progress, whether it’s by checking yourself in the mirror or getting on the scale. Stay accountable with your budget also. Try, especially at the beginning, to keep all of your receipts to see how your spending compared with your budget. Making necessary changes to the budget and to your spending will keep you on the right path.

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Retirement in Canada vs. the USA: A comparative look

aadmin — Tue, 02 Jul 2013 14:10:00 +0000

This is a big week for North America. This past Monday, July 1, was Canada Day, commemorating the 146th birthday of Canada, and this Thursday, July 4, is Independence Day, recognizing the 237th birthday of the United States.

These two countries, joined by history, geography, language and culture, are allies and friends, but some differences remain. In commemoration of the national birthdays of both Canada and the United States, RetirementHomes.com has prepared a statistical report comparing the state of retirement in both countries.

Canada, with a population of about 35 million, has an estimated 5 million citizens aged 65 and older, representing about 14 per cent of the population. The United States, with an overall population about nine time greater at 315 million, has about 42 million people aged 65 and older, representing slightly less, or around 13 per cent of the overall United States population.

In terms of life expectancy, a Canadian can expect to live to just under 81 years old, while their American counterpart is likely to live slightly less, to about 79.5 years old.

When it comes to pensions, Canada has received high grades for its government-sponsored retirement funds, being ranked sixth in the world, and the United States was slightly behind, ranked in ninth place overall.

On the health front, while the passage of the Affordable Care Act – popularly known as Obamacare – has stoked an internal debate in the United States about the nature of the health care system in that country, and its comparison to Canada.

However, data from the World Health Organization (WHO) shows neither Canada nor the United States as being first-class health care providers. The WHO ranks Canada’s health care system 30th in the world, compared to the United States, which ranks 37th globally.

But comparing retirement in Canada and the United States is more than just a matter of numbers and spreadsheets. The biggest question any Baby Boomer and prospective retiree must ask themselves is where they want to retire.

Many retirement rankings have claimed Central American countries are the best spots to spend the golden years, but the lifestyle of an expatriate is not for everyone, so a discussion with a retirement advisor and family members is the most appropriate first step.

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