In financial publications, you regularly read about couples that are wondering if they are able to retire as planned. These people all seem to have above average incomes, company pension plans, have been saving since they were five years old and have amassed a respectable portfolio. The consensus is always, “Yes, you will definitely be able to retire at your specified age and live the lifestyle you desire – no problem.”

But, what if you haven’t been a regular saver, don’t have a company pension, maybe have had periods of unemployment, or gone through an expensive divorce? Now you’re approaching the big five-oh (and I don’t mean Hawaii) and you’ve come to the realization that you haven’t saved nearly enough and wondering if it’s too late for you. Will you be flipping burgers well into your old age?

According to a recent article in the Financial Post, up to 20% of middle-income households will face a decline of 25% or more in their standard of living after they retire.

So You Haven’t Saved For Retirement?

Bemoaning past poor decisions and bad luck won’t change reality. You need to start getting your financial house in order, now.

How can you make proper decisions if you don’t know what you have, what you want to do, and how much it will cost? It’s time to make a plan.

You Haven't Saved For Retirement? Why It's Not Too Late To Have A Plan

1. Pay off any debts

Make this a top priority. If you will be living on a fixed income you don’t want to be using your savings to make consumer loan and credit card payments – with the accompanying high interest.

If past bad spending habits have led to your being in debt, you need to break them.

2. Start thinking about your retirement lifestyle

How will you live, and how much is it going to cost you? Visualize and price out your desired lifestyle. How much will you pay for annual golf fees, the Panama cruise or that motorhome? Find out now instead of having a vague idea in your head.

3. Review your retirement income sources

Determine your income target. How will you reach it? You might have some combination of employer pension, government benefits and your own personal savings.

If you haven’t already done so, sign up with Service Canada to determine your CPP and OAS benefits. Think about when you might want to begin payments. It’s important that you know and understand the implications of taking benefits at various ages.

Pull out your latest company pension statement. It will tell you at what age you can start taking payments and how much.

4. Do a retirement projection

There are tons on retirement calculators available online – some better than others. However, even the best ones are only tools that provide guidance. You don’t know the future so can only make assumptions about inflation and investment returns. Try out different saving an spending rates to get a range of outcomes. You may not like the answers, but it’s better to know you have a potential shortfall while you still have time to make adjustments.

5. Ramp up your savings rate

Maximize your TFSA and RRSP contributions. If you earn a higher income you should put as much as possible towards unused RRSP contribution room, then re-invest that tax return instead of spending it as you did in the past. While these contributions won’t have the years to compound like those made by a 20- or 30-year old, they are still important.

Take full advantage of any matching contributions offered by your employer. Or, you may be able to top up your pension plan.

We are eight years into a bull market for stocks. Have these recent stock market highs favourably impacted your portfolio? You may be tempted to try to realize the highest possible returns on your investments. This is a risky strategy and could cause you to fall even further behind.

6. Revisit your retirement date

Most people want to retire sooner rather than later.

Staying on the job an extra year or few increases the number of years you can save for retirement, and reduces the number of years you will have to withdraw from your savings.

Another option is to plan on working part-time after you leave your long-term employment.

7. Be creative

After you’ve crunched all the numbers, you may still feel you won’t have enough. This is where you have to start thinking about other possibilities.

Most of us plan to stay in our current homes, but there might be good financial reasons to move. It might make sense to consider downsizing to a smaller, newer home or one in a less expensive area to free up cash and reduce expenses.

Even if moving is not going to be on your radar, think about how you can use the equity in your home for a reverse mortgage or line of credit. You may take on a boarder, or rent out your garage or extra room for someone else’s storage.

Identify opportunities to save more. Get a side gig. Sell no longer needed or wanted belongings. 

Final thoughts

Funding your retirement is really a math problem. You need to assess your current situation – assets and debts. Beefing up your savings, making smart investing decisions, working longer and/or tapping into your home equity all can help.

You may not have the pleasure of a luxurious lifestyle, but you should be able to manage a pretty decent retirement doing the activities you enjoy.

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