If you want to make the most of your retirement, it’s important to start preparing for it as early as possible. When you take a proactive approach to your future, you can ensure that you have the funds you need to enjoy yourself in later life. Furthermore, knowing you’ve got your retirement planning underway will give you peace of mind. To get started now, take a look at the eight retirement planning steps everyone should take:

1. Think About Your Retirement Age

Technically, your retirement age is based on when you become eligible to receive payments from the Canada Pension Plan (CPP). The amount you’ll receive will depend on a number of factors, including your earnings throughout your life and the age at which you choose to take your CPP. In general, you can begin taking your CPP at 65, although it is possible to begin receiving pension payments from age 60 or to defer payments until you reach 70.

However, you don’t have to wait until you’re eligible for government support to give up work. Providing you can support yourself, you can choose to retire at any time. In fact, some people aim to work hard throughout their 20s and 30s so that they can retire at 40. By deciding what age you want to retire, you can begin to make decisions and base your plans on this goal.

2. Consider Your Future Lifestyle

Until you know what type of lifestyle you want to enjoy when you get older, you won’t be able to make firm decisions about your future. Of course, you can’t be expected to plan every aspect of your retirement 20 or 30 years in advance. However, you can begin thinking about how you’d like to spend the majority of your time post-retirement.

Some people want to emigrate and spend time living abroad, for example, while others want to take frequent vacations and travel the world. Alternatively, you may be content to live close to family and friends and spend your time with the people you love. For some, retirement is a time to release their inner entrepreneur and start businesses or invest in start-ups. With no limits to what you can achieve during this stage of your life, retirement can be an exciting time.

3. Calculate Your Expected Income

To confirm whether or not you’ll have the funds to enjoy your preferred lifestyle during retirement, take the time to calculate your expected income as it is now. You can take your Social Security benefits into account, as well as the annual income from any existing pension schemes or retirement plans you have.

If you’re still quite a way off retirement age, it’s unlikely your expected income will cover all of your projected costs. However, this can still give you an insight into whether you’re on track to fund your chosen retirement. Using conservative estimates to project financial gains between now and retirement, you can determine whether you need to make major changes to your financial plans.

4. Create a Retirement Budget

Now that you know what type of lifestyle you want to enjoy when you retire, you can begin creating a budget for this time in your life. Start with the essentials, such as housing, insurance, and food, before moving on to luxuries, such as entertainment and travel. Remember – you’ll need to increase the cost associated with these expenses now to account for inflation.

If you’re having trouble figuring out your retirement budget, there’s no need to panic. Using a retirement calculator makes it easy to answer the questions: how much money do I need to retire? Wealthsimple offers a variety of tools to help you plan your retirement and make savvy financial decisions. From automated portfolios to manual trades, their products enable you to put your retirement plans into action.

If there is a distinct difference between your projected income and your estimated retirement costs, you’ll know you need to make major revisions to your retirement planning. Although it can be a little nerve-wracking to realize your existing strategy won’t fund your chosen lifestyle during retirement, discovering this now gives you the opportunity to make meaningful changes to your plan. By doing so, you can ensure that, when the time comes to retire, you’ll have the funding you need to relax and enjoy yourself.

5. Find Out if You Have Workplace Pensions

The Canada Pension Plan is a state retirement benefit, but you may be paying into private or occupational pension plans too. For many people, this seems the easiest and most effective way to fund their retirement.

If your employer provides a pension as part of your remuneration package, this can go a long way to funding your retirement plans. The exact amount you will receive will depend on the formula your employer uses to calculate the benefits. Generally, pension benefits are based on numerous factors, such as your age, annual salary, and the amount of time you’ve worked for your employer.

Occupational pension plans

Occupational pension plans are managed by employers and give staff the opportunity to prepare for retirement by making monthly contributions to their investment. If you have an occupational pension plan, your employer will be making contributions too, so it’s an effective way to maximise your pension contributions. In some instances, your employer will make contributions, but you won’t need to, which means you can access the benefits without having anything deducted from your salary.

If you change jobs, however, you may not be eligible to continue taking part in your current pension plan. Depending on the specific terms of your agreement, you may be able to stay with the same pension provider, switch to a new plan, and continue making individual contributions. Alternatively, you may choose to stop making contributions and leave your investment to mature or transfer the funds to a new pension.

When you start a job with a new employer, you may be invited to join their workplace pension scheme. As a result, you could have numerous occupational pensions if you have regularly changed jobs. Due to this, it’s important to maintain up to date records of any pensions you have, so that your financial plans are based on accurate data.

As an experienced business and finance writer I understand the corporate landscape and the driving forces behind it. Over the years I’ve shared my insight and knowledge with key industry publications and dedicated my time to showing how business leaders can make their organisations more effective.