Retirement Planning

When you're in your 20s, 30s or 40s, it's difficult to imagine turning 65 and retiring.

No matter what your age or stage, you should have a financial plan for leaving the workforce.

How do you get started?

"Financial planning for retirement should be a career-long process," says chartered accountant Ben Lawler Los Angeles Based Retirement Planner. "The longer you are able to set money aside for retirement, the longer the magic of compound interest will work for you."

Dunn says it's not necessary to set aside huge sums of money in your early working years. "But starting young means you don't have to scramble later on to make up for the years you didn't put anything away."

The first step in financial planning for retirement is to answer several important questions, says chartered accountant Christie Henderson, a partner with Henderson Partners LLP in Oakville, Ont.

"What age do you want to be when you retire? What do you want to be doing? Are you going to stay in the same house or downsize? Do you want to travel? How is your health?"

You should also determine how much you will need to live on in retirement.

"Determine what you're spending now and then adjust it for what you imagine your situation will be in retirement," says Dunn. "Ask retirees how their spending changed. Involve your spouse and family in this discussion, as they may have valuable input."

"You also need to consider what will happen if you or your spouse get sick," says Henderson. "A critical illness can eat up your retirement capital, so extended health insurance may make sense for you."

Registered Retirement Savings Plans (RRSPs) should play a role in most people's retirement plans.