This article is Part 4 of our four-part series on “Investing in your financial well-being.” The series line-up is as follows: 

1. Money matters - addresses the fundamentals of financial planning, budgeting and investment.
   
   

2. Smart savers - focuses on effective saving habits and tools that can help Canadians maximize their financial resources.
   
   

3. Financial fraud - will provide crucial insights into protecting oneself from financial scams, a growing concern in the digital age.
   
   

4. Retirement ready - will guide readers through preparing for a financially secure retirement, a topic of paramount importance for individuals at any stage of their career.

Together, these articles aim to inform and empower our CSS Pension Plan members to take control of their financial future, fostering a community of informed, savvy and resilient individuals prepared to face the financial challenges and opportunities of the future. 

 The series will be a comprehensive guide to achieving and maintaining financial wellness.

• Your action item for Part 1 was to take the Financial Literacy Self-Assessment Quiz. 

• Your action item for Part 2 is to complete the Retirement Savings Course (a free online educational course developed by the Association of Canadian Pension Management). 

• Your action item for Part 3 is to complete the learning module “Fraud protection,” available from the Government of Canada. 

• Your action item for Part 4 is to complete your very own retirement income plan using the myCSSPEN Compass® Retirement Income Planner (accessible from your myCSSPEN account). 

Part 4: Retirement ready: Retire on purpose. With purpose. 

Preparing for retirement is crucial in ensuring long-term financial security and peace of mind.

Whether you're just starting your career or nearing retirement age, a solid plan can make all the difference.

“Retiring on purpose, with purpose” means approaching retirement with clear intentions and a sense of direction. It’s about more than just financial readiness; it’s about having a meaningful plan for how you’ll spend your time and energy in retirement.   

This article will explore the essential steps to becoming "retirement ready" and will provide practical advice to help you create a tailored plan suited to your own goals and circumstances. 

Step 1: Understand your retirement goals and timelines 

The first step in retirement planning is to define your retirement goals. Ask yourself what you want your retirement to look like. Do you plan to travel, pursue hobbies, volunteer or start a new venture? Understanding your goals will help you determine your retirement timeline and the amount of money you'll need to achieve them. 

This is about retiring with purpose—knowing what will bring you fulfillment and joy in your retirement years. Consider the activities and pursuits that will bring meaning and satisfaction to your life. Reflect on your passions, interests and the legacy you want to leave. By setting clear, purposeful goals, you can create a retirement plan that not only secures your financial future but also enriches your life with purpose and intention. 

Step 2: Estimate your retirement expenses

Next, estimate your retirement expenses. Reflect on your current lifestyle and how it may evolve in retirement. Standard expenses include housing, healthcare, food, transportation and leisure activities. Remember to account for inflation and unexpected costs. A retirement calculator can help you get a clearer picture of your future financial needs. 

Planning your expenses intentionally ensures you can support the purposeful activities you wish to pursue. This step is about retiring on purpose—by knowing your income needs (and your savings capacity), you control when you can retire and on what terms. Understanding your financial requirements allows you to make informed decisions about your retirement lifestyle, ensuring that you can engage in the activities that bring you joy and fulfillment. Whether it's traveling the world, dedicating time to volunteer work or pursuing new hobbies, having a clear financial plan empowers you to live your retirement years with purpose and intention. 

Resources: 

• Budget Planner from Financial Consumer Agency of Canada (FCAC) 
• Ontario Securities Commission: Retirement Budget Calculator 

Step 3: Understand your savings and potential retirement income sources  

To create a realistic retirement plan, you need to understand your current savings and potential income sources. This involves: 

• Assessing current savings: Review your existing retirement accounts, such as your CSS Pension Plan account, RRSPs, TFSAs and any other pension plans. Calculate the total amount saved and consider how much more you need to save to meet your retirement goals. This step is crucial for retiring with purpose, as it gives you a clear picture of your financial foundation and helps you plan intentionally. 

• Estimating future income: Identify all potential sources of retirement income, including: 

  • Canada Pension Plan (CPP): Provides a monthly, taxable benefit to eligible retirees. 

  • Old Age Security (OAS): A government-funded pension available to most Canadians aged 65 and older. 

  • Employer-sponsored pension plans: The CSS Pension Plan provides a reliable source of retirement income through a lifetime monthly pension and/or a flexible Variable Benefit payments account. 

  • Personal savings and investments: Including RRSPs, TFSAs and other investment accounts. 

• Projecting investment growth: Estimate the growth of your investments over time, taking into account factors such as interest rates, market performance and inflation. Understanding the potential growth of your savings allows you to make informed decisions about your retirement timeline and lifestyle.  

By thoroughly understanding your savings and income sources, you can retire on purpose—knowing exactly where your income will come from and how it will support your desired lifestyle.

This knowledge empowers you to make informed choices about your retirement activities, enabling you to pursue your passions and live a fulfilling life. 

Resources: 

• Government of Canada – Main sources of retirement income 

Step 4: Maximize retirement savings  

To ensure a comfortable retirement, it's essential to maximize your savings. Here are some strategies: 

• Start early: The earlier you start saving, the more you can benefit from compound interest. Compound interest occurs when your investment earnings begin to accrue interest on themselves, helping to maximize growth. 
• Contribute regularly: Make regular contributions to your retirement accounts - even small contributions can have a big impact over time. 
• Take advantage of employer contributions to your CSS Pension Plan account: Did you know your employer matches every dollar you contribute to your CSS Pension Plan account? This gives you double the earning power. Take full advantage of your pension contributions and your employer’s matching. 
• Diversify your investments: Most CSS Pension Plan members hold their assets in the CSS Balanced Fund. It’s our default fund, designed for members with a medium to long-term investment horizon. The Balanced Fund is a very well-diversified investment fund with managed volatility – in other words, it is less sensitive to market fluctuations over the long term. But did you know CSS Pension Plan also offers an Equity, Bond and Money Market Fund? Try out our Risk Tolerance Estimator to find out which fund – or combination of funds – can help you diversify your portfolio and maximize growth while keeping your comfort with risk in mind. Be sure to diversify your other retirement savings investment assets. 
• Consider tax-efficient options: All contributions you make to the CSS Pension Plan are tax-deductible, in turn reducing the amount of income tax you pay. Consider utilizing tax-advantaged accounts like additional voluntary contributions to your CSS Pension Plan account, registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs) to maximize your savings. 

Step 5: Regular review and adjustment  

Retirement planning is not a one-time task. It's essential to regularly review and adjust your retirement plan to stay on track. Life events such as marriage, the birth of a child, or changes in employment can impact your retirement goals and savings. Make it a habit to review your plan annually and make necessary adjustments. 

Practical tips 

• Plan for health care costs: Health care can be a significant expense in retirement. Consider purchasing health insurance or setting aside funds specifically for medical expenses. 
• Stay informed: Keep updated with changes in pension regulations, tax laws and investment options. 
• Seek professional advice: Consider meeting with a CSS Retirement and Pension Advisor or another trusted financial planner to help you create and maintain a robust retirement plan. 

Real-life examples

Let's look at a couple of real-life examples to illustrate the importance of retirement planning: 

Example 1: Early starter Leslie started contributing to her CSS Pension Plan account early in her career after accepting a position with Federated Co-operatives Limited (FCL). By consistently saving a portion of her salary and taking advantage of her employer’s matching contributions, Leslie’s pension account grew to $13,300. When she left FCL in 1982, she decided to leave her funds in the Plan. Her early start and disciplined saving habits allowed her to benefit from compound interest, significantly boosting her pension account balance from $13,300 to over $485,000 over the span of 46 years. Read more about compound interest and Leslie’s journey in this CSS article “Every dollar counts: A CSS member story”.  

Example 2: Late bloomer John, a 50-year-old engineer, realized he needed to ramp up his retirement savings. He increased his contributions to his CSS Pension Plan account, RRSP and TFSA, diversified his investments, and sought advice from a CSS Retirement and Pension Advisor. Although he started later, John's proactive approach and strategic planning have led him to a secure retirement. This article entitled “Is it too late to start saving for retirement” is a good read related to this situation. 

Resources: 

To assist you in your retirement planning journey, here are some valuable resources: 

• CSS Retirement Planning Toolkit (select the “Retirement planning in retirement” tab)  
• myCSSPEN® Compass – Retirement Income Planner 

Conclusion

Being "retirement ready" means taking proactive steps to ensure your financial security in your later years. By following the advice and utilizing the resources provided, you can develop a comprehensive retirement plan that meets your specific needs and goals. Remember, it's never too early or late to start planning for retirement. Take control of your financial future today and enjoy the peace of mind that comes with being prepared.