Planning for your retirement - Servus Credit Union

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Savings ultimately are not only a source of financialsecurity, they also earn income for you. The following chartdemonstrates the amount of savings that you need toaccumulate to produce a specific monthly income at variousrates of interest. For example, to earn $200 per month wheninterest rates are 4% requires $60,000 of savings.AnnualInterest RateMonthly Income Earned% $100 $200 $350 $500 $1000REQUIRED SAVINGS AND INVESTMENTS (IN THOUSANDS)3.00%3.25%3.50%3.75%40.0036.9234.2932.0080.0073.8568.5764.00140.00129.23120.00112.00200.00184.62171.43160.00400.00369.23342.86320.004.00%4.25%4.50%4.75%30.0028.2426.6725.2660.0056.4753.3350.53105.0098.8293.3388.42150.00141.18133.33126.32300.00282.35266.67252.635.00%5.25%5.50%5.75%24.0022.8621.8220.8748.0045.7143.6441.7484.0080.0076.3673.04120.00114.29109.09104.35240.00228.57218.18208.706.00%6.25%6.50%6.75%20.0019.2018.4617.7840.0038.4036.9235.5670.0067.2064.6262.22100.0096.0092.3188.89200.00192.00184.62177.787.00%7.25%7.50%7.75%17.1416.5516.0015.4834.2933.1032.0030.9760.0057.9356.0054.1985.7182.7680.0077.42171.43165.52160.00154.848.00%8.25%8.50%8.75%15.0014.5514.1213.7130.0029.0928.2427.4352.5050.9149.4148.0075.0072.7370.5968.57150.00145.45141.18137.149.00%9.25%9.50%9.75%13.3312.9712.6312.3126.6725.9525.2624.6246.6745.4144.2143.0866.6764.8663.1661.54133.33129.73126.32123.0810.00%10.25%10.50%10.75%12.0011.7111.4311.1624.0023.4122.8622.3342.0040.9840.0039.0760.0058.5457.1455.81120.00117.07114.29111.63PLANNING FOR YOUR RETIREMENT 7
Investing for ProfitSuccessfully investing your savings takes thought. Do itin a hit-or-miss way and you’ll end up with a mismatch ofsecurities that has no relation to your objectives. A wellplannedapproach to investing, on the other hand, canbe a profitable way to provide for your retirement.Fundamental steps to success include:DiversifyDon’t put all your savings in one type of investment. Whilefixed term investments such as term deposits, guaranteedinvestment certificates (GICs), Canada Savings Bonds orprovincial savings bonds will give you a guaranteed rate ofreturn, their value will be eroded by inflation. It is desirable tohave a portion of your portfolio in investments that increasein value, such as mutual funds or stocks.For the small investor, mutual funds are the simplest wayto diversify. They generally increase in value over time,but are not a method of getting rich quick. Because theymay decrease in value on a temporary or permanent basis,people usually invest only a portion of their savings inmutual funds.Learn the Risks InvolvedEvery investment entails some degree of risk. Ask questionsbefore you invest.Deposits at your credit union, trust company or bank arecovered by deposit insurance to varying degrees. CanadaSavings Bonds are guaranteed by the government ofCanada. Other bond values can fluctuate considerably withinterest rate changes.Real estate has been a profitable investment in many partsof the country. But property values can be affected byfactors beyond your control – mortgage rates, local businessconditions, re-zoning, etc. Adding to its appeal is the fact thatincreases in value are considered capital gains, qualifying forfavourable income tax treatment.Shares and equity mutual funds offer the best opportunityfor long-term growth because there’s no limit to their futurevalue or earnings. However, these investments carry morerisk, and there are no guarantees.8PLANNING FOR YOUR RETIREMENT
Page 4 and 5: How to Begin PlanningThere are thre
Page 6 and 7: Here’s WhereRetirement Income Goe
Page 10 and 11: Match Your Investments to Your Obje
Page 12 and 13: Worksheet for Planning Your Savings
Page 14 and 15: Old Age Security (OAS)People 65 and
Page 16 and 17: Disadvantages of This Kind of Plan
Page 18 and 19: Personal Pension Plans -RRSPs and M
Page 20 and 21: Term Certain Annuities to Age 90 (T
Page 22 and 23: Some Tax ConsiderationsRRSPs, RRIFs
Page 24 and 25: Planning for Retirement LivingWhere
Page 26 and 27: • If you’re married, consider d
Page 28: ® HANDS & GLOBE Design is a regist

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