Some of you may have been diligent about saving for retirement. Me? Not so much. Benefits like pensions never meant much when I worked in the corporate world. Maybe I should have paid more attention… Retirement savings contributions have been sporadic at best – I was busy paying for the present! Maybe I should have tried a little harder, spent a little less on “stuff”. Is it too late to start start taking it seriously now? I hope not!
So, I started to do some digging. How much do I need? How much am I willing to cut back? And on what? How long do I have to plan for? I’ve never paid much attention to money matters. We’ve had lots and we’ve been broke. We’ve managed – paid our bills on time, never gone hungry – but, coming up to this new adventure, maybe it’s time to get money savvy.
Step 1 – get a handle on what we’ll spend each month. I created a worksheet listing all our expenses – food, utilities, taxes, prescriptions, clothing, Christmas, birthdays, insurance, and more. I based the numbers on what we currently pay and added ten percent – just in case.
Step 2 – gather information about what kind of income we can expect. We’re in Canada so we’ve paid in to the Canadian Pension Plan all our working lives. Our retirement plan relies on it still being around when we need it!
Step 3 – add up all our investments. This didn’t take long – there are embarrassingly few…
Step 4 – using the information from the previous steps, figure out how much we need to save over the next few years. This step scares me!
And scare me it should… A basic calculation taking our annual expenses minus expected income minus the total of our retirement savings leaves us with a shortfall of (drumroll, please) $427,500. With 66 months until I turn 65, that means we need to put away almost $6,500 per month. ROTFL as my grandkids would put it (rolling on the floor laughing – yes, I had to ask). Of course that doesn’t take in to account compound interest. At a conservative estimate of four percent return annually, we’ll have our retirement funded six months early.
Guess I’d better start whittling down those expenses. Hmmm, where to start?
Want to check your numbers? Click here to see my simple worksheet – hope yours looks better than mine!