Pre-retirement planning important to saving

Many people want to know how much money they can expect when they retire. The question I am most often asked is:

“How much will I get?” While this is an important question, I believe that there are other questions and considerations that are far more important.

Here are the most important considerations and questions:

Begin saving as early as possible
How much do I spend each month?
Do I use a budget to control my spending and saving?
Do I stick to my budget?

Save early
Age	No. 1	No. 2
30	5,300
31	10,918
32	16,873
33	23,185
34	29,877
35	36,969	5,300
36	44,487	10,918
37	52,457	16,873
38	60,904	23,185
39	69,858	29,877
40	79,350	36,969
41	89,411	44,487
42	100,075	52,457
43	111,380	60,904
44	123,363	69,858
45	136,064	79,350
46	149,528	89,411
47	163,800	100,075
48	178,928	111,380
49	194,964	123,363
50	211,961	136,064
51	229,979	149,528
52	249,078	163,800
53	269,323	178,928
54	290,782	194,964
55	313,529	211,961
56	337,641	229,979
57	363,199	249,078
58	390,391	269,323
59	419,008	290,782
60	449,449	313,529

The most important place to start when you are beginning to consider retirement is as early as possible -the younger the better. On a number of occasions, I have counseled people who begin to make retirement plans five years from retirement. When I note that their retirement income is likely to be much less than they had anticipated, many are quite stunned. But it is easy to understand why. Saving money for retirement can be very difficult. The costs of raising children and teenagers and also helping them through a college or university program can last for over 30 years, if you have three children, have them two years apart and they are not completely financially independent until they are each 24 years old.

Having children is not cheap.

But, why is it so important to begin saving early? Let’s assume that there are two people who save $5,000 per year. They both want to retire at the age of 60. One is 30 and the other is 35.

What will the value of their accounts be by the age of 60 assuming a six per cent rate of growth and contributions made at the beginning of the year? See graph for the calculations.

As you can clearly see, the additional five years of investing makes a huge difference. If we extend our assumptions to age 69, person one would have more than $800,000 while person two would have a little more than $400,000.

Those initial five years are actually worth an additional $400,000 to person one. If possible, begin saving today.

This article is supplied by Gordon Keesic, an Investment Advisor with RBC Dominion Securities Inc in Thunder Bay, Ontario. Member CIPF. This article is for information purposes only. Please consult with a professional advisor before taking any action based on information in this article.