What is Retirement Planning Canada?

The fundamental definition of retirement planning is the act of setting aside enough money during one’s younger years to provide income savings during retirement.
Wikipedia defines retirement planning as the allocation of finances for retirement. This normally means the setting aside of money or other assets to obtain a steady income at retirement. The goal of retirement planning is to achieve financial independence, so that the need to be gainfully employed is optional rather than a necessity. The process of retirement planning is to assess readiness-to-retire given a desired retirement age and lifestyle. It also identifies actions to improve readiness-to-retire.

How does the Canadian Government Assist in Retirement Planning?

The Canadian Government has developed a calculator to help you plan for retirement. The calculator takes you step by step through an estimate of the ongoing income you may receive throughout your retirement from:
• Old Age Security (OAS);
• Canada Pension Plan (CPP) or Quebec Pension Plan (QPP);
• employer pension(s);
• Registered Retirement Savings Plans (RRSPs); and
• Other sources of ongoing income.
The Old Age Security program and the Canada Pension Plan (or Quebec Pension Plan) provides a modest secure base on which to build your private savings. The calculator helps you assess your personal financial situation and helps you decide which steps to take to reach your retirement goals.

Canadians are also entitled to Canada Pension Plan and Old Age Security, to provide for a comfortable and dignified retirement lifestyle. They have a Registered Education Savings Plan for their child's higher education.

What is the System of Retirement Income in Canada?

There are three levels of retirement income system in Canada. These are the following:
1. Old Age Security (OAS) provides the first level, or foundation. If you meet certain residence requirements, you’ll be entitled to a modest monthly pension once you reach the age of 65.
2. The Canada Pension Plan (CPP) is the second level of the system. It provides you with a monthly retirement pension as early as 60, if you have paid into it. The Canada Pension Plan also offers disability, survivor and death benefits. Quebec has a similar plan, called the Quebec Pension Plan.
3. The third level of the retirement income system consists of private pensions and savings.
The first and second levels of Canada’s retirement income system comprise the nation’s public pension system. These pensions form a considerable portion of the income of Canada’s seniors. Public pensions are not meant to meet all your financial needs in retirement. However, these provide a modest base for you to build upon with additional, private savings. Many employers help build your retirement income by providing pension plans. You can build your own nest egg through Registered Retirement Savings Plans (RRSPs) or earmark for retirement other investments such as mutual funds or the equity in your home. The Government of Canada provides tax assistance on savings in Registered Pension Plans, which encourages and assists saving for retirement.

How to Plan for Retirement?

For majority of Canadian citizens, retirement is the incentive for a whole lifetime of work and hardships. After years of spending a substantial part of your time in working and providing for your family’s basic needs, retirement is the time to go on tours, take a long vacation, play golf every day, or spend more quality time with your loved ones. When you start planning for retirement, one of the first questions you'll have to address is how much money do you need to retire?
We have been alerted to the possibility that those of us newly retired or soon to retire will not be able to count on the Government support that our parents did.
If we are to achieve and maintain a financially secure retirement we must become knowledgeable, informed and involved in creating the income that will support our retirement financial needs.

Prepare for your Retirement

Technology has made it easy for anyone with the desire and initiative to get as much information as is needed to begin to take an active role in their own financial planning and welfare.
Since we are living such longer and more active lives many of us will need almost as much income as we needed before we retired.
Health issues can place a bigger financial strain on our retirement income. So, if we do not want to live a limiting and financially restricted lifestyle when we retire, we must take steps today that will ensure we have the financial means to enjoy a secure retirement. Neither age nor income level should prevent us from taking an active and proactive interest in our retirement planning.

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