Though it’s best to chat with a professional to understand exactly what your next savings move should be, you can start your stockpile by ignoring these common pieces of money-saving advice.
You need 80 per cent of your pre-retirement income to maintain your current lifestyle during retirement
Talk to your old man or your grandma and they’ll nag you to the ends of the Earth about preparing for retirement. But while these money-saving tips seem smart on the surface, John Deglow, CFP, AIF, at Unified Trust Company, says the reality is many retirees live well below their means and this figure greatly overestimates the income they’ll actually need once they put in their notice.
As an example, a couple might make $100,000 a year after taxes, but once the kids have flown the coop and the mortgage has been paid off, they actually spend $50,000 annually on expenses.
So why would they suddenly need $80,000 to make ends meet when they’re job-less? “A better assumption might be that you would need 80 per cent of your current expenses – not income – during retirement,” he says.
Even so, make sure to book a one-on-one with a trusted financial professional who can help you better understand the effects of inflation and accommodate other issues unique to your situation, he adds. Here are four more secrets to saving for retirement.