Tips For Early Retirement For Canadians

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Tips For Early Retirement For Canadians

 Tips For Early Retirement For Canadians

Summary

  • Many Canadians who had a plan in place for early retirement lost a chunk of their savings this year due to the novel coronavirus pandemic.
  • If you are planning to start an early retirement plan for the first time or have another go at it after a tough few months amid the pandemic, take a look at these tips.
  • A few things to keep in mind when kick-starting an early retirement plan would be to have patience, be consistent and to know your risks well.

Retiring early from a work life seems like an appealing idea to many, but not all can afford it. In fact, many of whom had a plan in place for early retirement lost a chunk of their savings this year due to the novel coronavirus pandemic and all the unprecedented financial obstacles it brought along.

If you are someone who is planning to start an early retirement plan from a scratch or are looking to revisit it after a tough few months amid the pandemic, here are a few tips that you could check out.

Alternative income sources

A study recently released by Statistics Canada found that the pandemic puts households with younger income earners (Gen X and millennials) at a greater financial risk than others. One of the primary reasons behind this was their economic dependence on wages and salaries.

Having an alternative source of earnings, such as a small business on the side or a market-based investment plan, can help reach the savings goal for an early retirement quicker than solely depending on one source of income.

Put aside some savings regularly

The data presented by the Distributions of Household Economic Accounts (DHEA) shows that while households younger income earners had a higher disposable income in 2019, their expenditure is also high.

So a pro tip given by advisors to people looking for early retirement planning is keeping aside a savings regularly and without fail. This would most commonly require cutting down your expenditure, but not necessarily to bare necessities. You could try out some budget planning apps and figure out what works best for you accordingly.

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Managing your debt

The DHEA data from 2019 showed that Generation X households had the highest debt-to-income ratio of all generations, at 220 per cent, closely followed by that of 199 per cent by the millennial households.

One way to approach early retirement is by managing or renegotiating your debt and mortgage plans well. Even the smallest drop in interest rates can lead up to saving hundreds of dollars in the long run.

Invest wisely

The study shared by Statistics Canada recently, titled ‘Inter-generational comparisons of household economic well-being’, pointed that one of the reasons contributing to the economic risks posed at younger households is their tendency of having less equity investments.

If, with proper financial guidance and understanding, you put aside a part of your funds in equity markets for capital appreciation and wealth accumulation, you could reap decent benefits in the long run.

A few things to keep in mind when kick-starting an early retirement plan would be to have patience, be consistent and to know your risks well. Your retirement fund will not grow overnight, and even not over long term unless you invest in it with religious consistence. And most importantly, make your investments only after knowing all the risks and preparing a fallback plan for a rainy day – such as a pandemic.

Prospective investors are advised to do their own due diligence and/or discuss with financial advisors before taking forward any investment planning based on any information provided by Kalkine. All information presented in this publication has been compiled with the sole intention of providing market-oriented insights. Kalkine does not warranty accuracy, reliability and/or completeness of the information published by us.

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