Fallen Off the Financial Plan? How to Get Back on Track

Imagine being 65 years old - the former retirement age. No, seriously, take a moment and imagine that you're 65 years old. Think about what you're doing and how you're feeling. Think about your financial situation - are you where you want to be?

Ok, take a deep breath, you're not alone. It turns out 61% of Canadians ages 45 to 64 don't have a formal plan in place according to TD Waterhouse. The excuse? They just haven't gotten around to creating one.

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I have to admit that surprised me. We're so used to reading about how the younger generation doesn't have financial plans in place and are up to their eyeballs in debt that we forget that lack of financial planning affects all ages.

So how can you put a plan in place? Crystal Wong, Senior Regional Manager, TD Waterhouse Financial Planning, shared a few tips with us.

1. You don't have to do it on your own. In fact, professional advice is always useful when creating a plan. After all, you need to account for taxes, will planning and the markets.

2. Determine and priorities your goals. I've often said that my major financial goal is to not end up in a box under the Gardiner Expressway. It's extreme but it helps me focus on my financial plan and helps me save money.

3. Analyze your current financial situation: Are your savings enough? Is your budget accurate? This is also the time to determine what are needs and wants. Shelter, food and clothing are needs. Taxes are also "needs" in the sense that you need to pay them.

A fancy new dress is not a need, sorry.

Other things to consider, do not spend more than you make, what do your taxes look like, what is my pension plan look like (if you have one) and will you have to rely on the Canada Pension plan when you retire? All of these need to be considered. For example, the self-employed don't have access to a pension so have to adjust their financial plan to focus on RRSPs, etc.

4. How are you going to get there? This is where sitting down with an expert can help determine your income, your debt and the best ways to save. Do you really need to max out your RRSPs? How soon can you pay off your mortgage? Will you need to help your parents and kids? What stocks should you buy?

5. Implement the plan. Writing this done is great but if you shove the plan in a drawer, then what's the point?

6. Monitor the plan. You can do this yourself but most people are often too busy to do this. This is where professionals can be useful.

Do you have a financial plan in place? How often do you monitor it? Tell us in the comments!

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