Tips and tricks for retirement savers facing scary markets, inflation

Writing for Yahoo! Finance, Ella Vincent notes that these times of up-and-down markets and rising inflation are worrisome for savers.

She offers a variety of tips and tricks, some of which we have “Canadianized” as she is aiming her advice at a U.S. audience.

First, she writes savers nearing retirement should be thinking more about risk than they do about chasing growth.

Ken Moraif of Retirement Planners of America tells Yahoo! Finance that “risk control is incredibly important in our view. We have a philosophy that says you should only take as much risk as is necessary to accomplish your financial goals. Risk control is the number one thing to determine how much risk is appropriate for you and proceed accordingly.”

Diversify your portfolio so you aren’t “all in” on any one investment category, the article advises.

Moraif tells Yahoo! Finance that you should also review your investment philosophy. A “buy and hold” strategy, where workers “buy and hold stocks until they retire,” may not be effective as you move into retirement, where the goal is preserving capital versus growing it.

Buy and holders need to develop a “sell” strategy, Moraif states in the article. Reducing equities is sometimes away to cushion yourself from stock downturns while conserving your principal, he explains.

Next, consider tapping into your retirement account later. Here in Canada, that could mean continuing to work until you are 70 before starting your Canada Pension Plan benefits, with the idea being you’ll receive a greater monthly benefit the later you start.

If you didn’t start saving for retirement while you were young, you can try to catch up in your 1950s by maximizing your contributions to retirement savings programs. Here north of the 49^th that means things like filling up registered retirement savings plan room with an eye on maxing out. A Tax Free-Savings Account (TFSA) is also handy in retirement, so if you haven’t got one rolling by your 50s, you will have a lot of room there to use as well.

If you’re in a retirement program at work, be sure you are contributing to the max, the article adds.

Let’s sum this up. Don’t place your bets on one horse when it comes to financial markets; diversify to avoid risk. Your investment philosophy should be more about conserving capital than trying to grow it. Consider starting retirement benefits later so you get more — that usually means working longer too.

Don’t panic if you weren’t a saver in your 20s and 30s — there is still time in your 50s to try and max out your retirement savings vehicles like RRSPs and TFSAs. Be sure to join any retirement savings program through your work and contribute as much as you possibly can.

It’s a lot to take in.

There’s another way to go that’s open to any Canadian with RRSP room, and that’s the Saskatchewan Pension Plan. It’s a voluntary defined benefit pension plan where how much is contributed is defined by you, the member. You can chip in up to $7,200 a year, and can consolidate any other bits and pieces of retirement savings by transferring up to $10,000 a year in from other RRSPs. SPP will grow your savings and at retirement, you have the option of a lifetime annuity — a supply of monthly payments that never runs out! Check out SPP today!

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