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Top 10 tips for a financially secure retirement

If only saving was this simple

Creating a financially secure future can be a daunting prospect, particularly in the midst of a recession. But adopting an avoidance strategy for retirement savings is hardly a money-savvy move. No matter what your stage of life, these simple tips are a good starting point for stability in your golden years.

1) Pay yourself first. "That's my number one rule," Jillian MacPherson, Associate Portfolio Manager at TD Canada Trust, told VO.

Shockingly, MacPherson doesn't think that budgets are a necessity. Isn't that sacrilegious for a money-pro? A kind of financial blasphemy?

Not necessarily, according to MacPherson. "If you take out 20% of what you’re making after tax and put it into a savings plan you’ve saved enough," she explained.

2) Have a plan. "It’s the old adage. If you fail to plan, you plan to fail," stressed MacPherson. If you have a goal of where you would like to be, you should figure out how you're going to get from A to B, she said.

"It's shocking how many people put more thought into buying a car than their retirement savings," she noted.

3) Educate yourself or see a certified financial planner (CFP).

"If you’re not prepared to do ten hours of research you should be prepared to use a professional," said MacPherson, quoting Jim Cramer from CNBC.

If you're prepared to do your own research, then go for it. But if you lack time or interest a CFP will give you the benefit of their expertise, said Petra Remy, Manager of Investment Solutions and Group Plans for VanCity.

In the long run, the costs of hiring a professional will be returned though good financial decisions, MacPherson said. "If you hire a good professional they should be able to make you money and help you avoid major pitfalls and mistakes."

4) Be a tough customer. If you decide to see a professional financial planner, don't settle on the first one you meet. Go and interview a few, encouraged Remy.

"You need to be comfortable with them. It's like going to a doctor. It's personal," she said.

5) Ensure that your individual needs are met. "People will look at general recommendations and think that they have to follow them exactly," said  Remy. The recommendations exist to make people think, but they won't help you create a plan that's right for you, she said. The right CFP can be a great ally.

Knowing about your individual needs might also mean recognizing cultural and gender differences.

"Women still make less than men do," Remy pointed out. Women also tend to save differently. "Women want the information. They review it, think about it and stick to it. Men tend to be more short term, although this doesn't mean that they don't review as well. They are more likely to ask about new plans, like gold or platinum cards."

6) Don't be embarassed if you don't understand. Not everyone is a money expert, but we should all have the benefit of knowing how our financial decisions will affect our futures.

"There are a lot of tools out there. People look at them and say, 'What does it all mean?"

Your financial planner should explain their recommendations in a way that is easy to understand, said Remy. They should ensure that the information is presented at their client's level.

"It's your retirement. It's your needs," she emphasized.

7) Review your plan. It's simple: your life is constantly changing and so are your financial needs. So every two years, go back to that plan and check to see that it still works for you.

8)  Start now.  The younger you start saving, the better. "If you’re doing it consistently then you have time working to your advantage," MacPherson said.

When people are younger and don't have children, they might have more money to put towards retirement, Remy said. But "you’re never too young and you’re never too old to start planning for retirement," she said.

Your financial situation may be different depending on where you are in your life cycle and career.

It's still important to continue saving once you have children, even though you may find yourself spending more money on sports and other activities, Remy said. "When you have kids, you're living in the here and now, but the future creeps up."

When you get older, you might have more money to put away, so review your situation and make sure you know where you stand, she said.

9) Don't spend beyond your means. MacPherson stressed the importance of knowing, and working with, your budgetary limitations.

"Don’t spend more than you make. Ever. Ever. If you need to borrow to buy a car, maybe you should take the bus. But if you need the car for your job then you have to do a cost-benefit analysis."

10) Keep your emotions in check. Many people have difficulty admitting that they've made a mistake, but that kind of attitude won't help you build your financial portfolio.

"Some people act as if they're married to their investments," said MacPherson. The key is to remain as unemotional about your investments as possible.

"Remember, no one has a perfect battling average," she said.

Making big financial decisions, including saving for retirement, can be a huge source of stress and can become quite complex. But follow these ten simple rules and you will have made a solid first step on the road to financial success.

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