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3 Ways to Retire Sooner!

Posted on 5:04 PM by Mike Hassard - Kelowna

With the economy slowing, real estate prices dropping and retirement savings shrinking many are wondering what to do now? Put off retirement? Work a second job? Or resign your self to a weekly trip to the mall instead of annual trek to Arizona? Under all this pessimism there is hope.


The reality is all these things have happened before (although for many it has been more severe than expected) and if you are properly positioned and prepared here are three things you can do to give your retirement plan a boost.

1. Increase Your Monthly Contribution

Before I show you how ... the question of course where do I get the additional income to invest? The answer ... as you pay down you debts, decrease your insurance costs and your children move out you should find yourself in a better position to save and invest more.

You'd be surprised how much an additional 200 dollars per spouse per month (400 total )can contribute to your retirement income.

Total deposited (120 payments) 72,000*
Value at 10 % growth rate 159,000*
Based on 6% withdrawal rate 9,540 a year in additional income*

To check out the impact of a monthly deposit try the Mackenzie Financial Investment and Regular Deposit Calculator.
2. Top Up Your RSP using a Loan

By making a lump sum deposit to your RSP you can boost your income in retirement. For every 1o,ooo you add to your RSP account you add $600 a year based on a 6% withdrawal rate. (Keep in mind you will pay taxes on this income).

50,000 investment at 10% over 10 years 129,687*
Based on a 6% withdrawal rate 7,781 in additional income*

A few things to consider BEFORE you embark on an RSP loan.
  • Is your job and income stable?
  • Are your other bills paid off?
  • If you are counting on tax refund ... have you confirmed this with your accountant.
  • Can you afford the loan payments?
  • Is the benefit worth the cost and the risk?

A good resource to calculate the value of an RSP Loan is Mackenzie Financial RSP Loan Calculator.

3. Downsize Your Home

This is one option I am seeing less of right now ... selling the family home to buy something smaller to invest the difference.

Part of the problem is many have got used to the high property values of their homes and are unwilling to sell unless they get want they think their house is worth.

Hoping to get "as much as possible" is a game few home sellers can win. If you know how much you will need ... then when you get the right offer you can sell with confidence.

Sell and buy smaller home 150,000 net profit
Based on a 6% withdrawal rate 9,000 in additional annual income*


Which strategy is the right one for you? In my opinion ... all three in varying degrees depending on your situation.

To do anyone either has a huge impact on your cash flow, requires to take out large loan or leaves the success of your financial life on sale of your home.

So where do you start? Before implementing any of the above sit down with your financial professional and review the impact of each on your retirement plan. Come up with your FIN number and work your solution backwards.

If you are closer than 15 years to you retirement ...make sure give me call to update you Financial Needs Analysis. The more time you have to work with the better chance for success.


Plan today ... and Retire Sooner!



*Rates of return and withdrawal rates used above do not reflect an actual investment or product and are for example purposes only. Links to the calculator provided to Mackenzie Financial at http://www.mackenziefinancial.com/en/pub/tools/calculators/index.shtml

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Mike Hassard is a Representative of Primerica Financial Services. Licensed to sell life insurance by Primerica Life Insurance Company of Canada and markets mutual funds through PFSL Investments Canada Ltd, Mutual Fund Dealer. Check here for important disclosures.

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