Work toward your own financial freedom

On July 1, we celebrated “Canada’s birthday” and the many freedoms we enjoy as Canadians. But as you go through life, you’ll learn how important it is to work toward another type of freedom — financial freedom.

That’s why now is the time to think about putting strategies in place to help you work toward your own celebration of financial freedom. And there’s no way to “sugarcoat” this task, because it’s challenging. In recent years, a combination of factors — including the financial market decline of 2008 and early 2009 — has made it more difficult to accumulate the resources we’ll need to enjoy the comfortable retirement we’ve envisioned.

But now that we’ve gotten the bad stuff out of the way, let’s turn to the good news: You can do a great deal to work toward financial freedom during your retirement years. Here are some suggestions to consider:

Save and invest more

Obviously, the younger you are, the greater the benefit you can potentially receive by increasing your savings and investments. But whatever your age, you’ll find that it pays to save and invest more. It’s not always easy to boost your savings and investments, but try to find ways that are as automatic as possible. For example, whenever you get a raise, consider increasing your monthly retirement contributions. Should you receive a “windfall,” such as a tax refund, think about using part of it for your Registered Retirement Savings Plan, Tax-Free Savings Account or another investment account.

Review and rebalance your portfolio. It’s always a good idea to periodically review and, when necessary, rebalance your investments to make sure they’re still aligned with your goals and risk tolerance. But it’s especially important to rebalance as you get older and you near retirement. At this stage, you’ll want to think about decreasing the volatility in your portfolio and locking in what gains you’ve achieved. So you may want to consider moving some (but certainly not all) of your more aggressive investments into less volatile ones.

Cut down on debts

It’s easier said than done, but anything you can do to reduce your debt can help free up money to invest for your retirement. Work diligently to pay off whatever debts you can and examine your lifestyle to find areas in which you can reduce spending.

Consider working part-time during retirement

Many Canadians are now living longer and enjoying happy, healthy retirements. In fact, the concept of retirement has changed so that it now includes any number of activities — including part-time work in a completely different area from one’s previous career. If you’re willing to do even a little part-time work during your retirement years, you can greatly reduce the financial pressures you may face during this time of your life.

Canada Day came and went quickly. So put strategies in place now to help you work toward your own financial freedom.