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Retirement is not just something that applies to seniors. It may not be a priority for people aged 18-34, it is not too early for them to be thinking about it for their future. People in this age group will be living longer, healthier lives. Proper planning is essential if they will be living for 20, 30, or even 40 years of life in retirement. When talking to your adult children about retirement, here are some ideas you may want to share to make the idea of retirement and retirement planning relevant for them now.
Retirement has Changed
The retirement rules for young people have changed. Thirty, 40 or 50 years ago, people didn’t have to put a much though into retirement planning. Between the company pension and government benefits, cash flow was taken care of, and it was not something that individuals had to take personal responsibility for.
Then, Canada Savings Bonds (CSBs), Guaranteed Investments , Certificates (GICs) or regular savings accounts could all be counted on to provide a decent rate of interest. Times have changed, and the power of compound interest may not be enough to build your savings for retirement.
The Dream of Early Retirement
For many young people, early retirement is a dream. Today’s young people are bright, well-educated, and motivated to continue using their talents. Instead of looking at retirement as a time to stop working entirely, they are more likely to be looking forward to a time when they have the financial independence to choose when and how much they will work. For them, a good retirement is about being able to work because they want to, not because they have to.
Set a Savings Goal
A standard rule which people have heard is to set aside 10 percent of income for long-term savings. This has always been a favourite number to use. If you can’t save 10 percent, then start with a smaller percentage and increase it over time.
Start your Retirement Planning Now
The key word here is “plan.” It’s a blueprint for having the kind of life you want. The bulk of our retirement income is going to come from our savings, and it’s important not to outlive our money. Traditional pensions which were used to fund a large portion of retirement income may not be available, either because an employee hasn’t been with a company long enough to make a significant contribution to the fund or because the employer doesn’t offer one.
How much money will you need to retire? It’s really a matter of personal choice. You need to think about the following:
Talk to a Financial Advisor
The process of planning for retirement may seem daunting, but your adult children don’t have to do all the work themselves. There are many choices of savings and investment products available, and a financial advisor or financial planner can answer their questions and get them started on the right track. The sooner they start saving, the more time they will have to reach their retirement goals.