Scotia Investments

Financial Learning Centre

Scotia Investments Financial Learning Centre

Money Management Guide - Retirement With Limited Savings?

If you are close to retirement age, then hopefully you have a large chunk of money already saved to last for a good amount of time. If you don't, then it is important that you do not wait a day longer to start your retirement fund! You may be starting at a pretty late stage, but there is still some time left.

However, you must realize that you may not reach that desirable amount you could have, had you started earlier. On the contrary, you are older and less likely to squander excess money on entertainment and other optional expenses; therefore, setting your priorities should be easier.

Shedding expenses

Start by shedding your expenses and finding the fat in your budget. Do you really need to order lunch at work everyday or visit the salon every week? Explore cost efficient alternatives to the things you spend your money on. Instead of impulse shopping, picking up the first good thing you see, how about shopping around for bargains/better prices? Chances are, you'you'll find them.

One of the things you can also do to assist in finding extra cash is sourcing additional income. If you have a skill or talent, maybe you can turn this into an income source. If possible, get yourself a weekend job for a period of time. If you travel annually on vacation, foregoing that this year and saving the money instead, wouldn't be a bad idea. At this point, you need to make as much sacrifices as you can make, to ensure a financially secure future.

Do the necessary review

Can you financially take the risk? Do you have the resources to invest or do you need to secure a loan? Remember, you will not have any medical benefits or 401k being provided for you. Take a good hard look at your financial situation and how much risk you are willing to take before you quit your day job.

Assess you lifestyle (house, vehicle, spending habits)

You've probably gotten use to the lifestyle you've built for yourself, but changing it a bit may be your only option. If you live alone or have a small family living in a large house, for which you pay a hefty mortgage or rent, the time has certainly come for you to consider moving to a smaller and more cost efficient abode (in some cases humbler). If you drive an expensive car, the time has come for you to consider a downgrade. If you take your family to expensive restaurants on a regular basis, this may have to be reduced to once a month (depending on how much you had already saved towards retirement).

If you stick with it and dedicate yourself for a period of time to do some heavy saving, eventually you can go back to the lifestyle you once enjoyed. At that point, you would feel more comfortable to know you have money to fall back on, should your monthly income cease.

During this period, you will have to be true to yourself with your projection of how much you can have, after a specified amount of time, based on your income and other sources of money. You can do an estimated calculation and see if the amount would be adequate after you retire (note, that your aim should be to have more than adequate funds in place). Having enough money to survive during those all-important retirement years is important, and even though you may have had a late start, every dollar counts and will go a long way in building your nest egg.