{"id":91373,"date":"2025-01-15T19:09:49","date_gmt":"2025-01-16T00:09:49","guid":{"rendered":""},"modified":"2025-01-16T15:39:21","modified_gmt":"2025-01-16T20:39:21","slug":"3-steps-to-prepare-for-retirement-amid-cost-of-living-crunch","status":"publish","type":"rbc_my_money_matter","link":"https:\/\/www.rbcroyalbank.com\/en-ca\/my-money-matters\/goals-aspirations\/retirement\/planning-for-retirement\/3-steps-to-prepare-for-retirement-amid-cost-of-living-crunch\/","title":{"rendered":"3 Steps to Prepare for Retirement Amid Cost-of-Living Crunch"},"content":{"rendered":"\n
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A recent RBC poll finds one in five grandparents today are helping to support an adult child with everyday needs like clothing and groceries. If you’re approaching retirement age amid this cost-of-living crunch, you’ll want to consider these three steps to stay on top of your finances.<\/p>\n\n\n\n

Retirement years are fast approaching for the one in five people<\/a> in Canada between the ages of 55 and 64 who haven’t yet stepped away from the working world. This milestone can bring a sense of achievement, excitement\u2014and potentially, concern. That\u2019s because lately, the high cost of living is taking a toll on would-be retiree\u2019s finances.\u00a0<\/p>\n\n\n\n

For those approaching or already in retirement who have children and grandchildren, there\u2019s an additional twist: they\u2019re finding themselves supporting these younger family members who are struggling to keep up with their bills. A recent RBC poll<\/a> that surveyed grandparents aged 55 plus found one in five (21 per cent) are currently supporting at least one adult child aged 25 plus and three in ten (30 per cent) have gifted money to their grandchildren.  <\/p>\n\n\n\n

In addition, seven-in-ten (70%) of these grandparents reported their adult children expect them to help cover necessary costs \u2013 such as food and clothing \u2013 and more than half (54%) are providing this money at least monthly. For the money these grandparents have given to grandchildren, support for everyday living costs (30%) is second only to education expenses (39%). Over half (54%) are providing more money due to rising costs and three in ten (29%) are worried they will need to increase the financial support they provide this year. <\/p>\n\n\n\n

\u201cAs costs continue to increase, grandparents are helping out with everyday needs like rent, clothing, groceries and utility bills,\u201d says Craig Bannon, director, Financial Planning Centre of Expertise, RBC. \u201cIt\u2019s becoming more and more important that the money they are providing to younger family members becomes part of their financial plans.\u201d<\/p>\n\n\n\n

If you\u2019re one of these grandparents, here are three steps to help you stay on top of your finances:  <\/p>\n\n\n\n

Review your finances  <\/h2>\n\n\n\n

It\u2019s crucial to sit down with an advisor\u2014something too many people skip, according to Bannon. In the recent grandparent survey, only just under two in five (37 per cent) respondents said that they have reviewed their finances to see how much financial support for younger family members they could afford to provide. <\/p>\n\n\n\n

An advisor can review your investments and portfolio and help you explore your options. <\/p>\n\n\n\n

\u201cOnly once you have that knowledge can you really think about what strategies you might be able to put into place now or in the future to help ensure you\u2019re on the right track, or to put yourself into a better situation,\u201d Bannon adds.<\/p>\n\n\n\n

For example, if you\u2019re not yet retired but not managing to save enough, you could consider delaying your retirement, continuing to work part-time or scaling back on the retirement lifestyle you\u2019ve pictured. While no one wants to hear they\u2019re approaching a budget shortfall, it\u2019s better than the alternative\u2014not knowing until it\u2019s too late.<\/p>\n\n\n\n

If you\u2019re already retired and supporting adult children and\/or grandchildren, Bannon recommends you have open conversations with these family members, early and often. And include talking with an advisor. Frank conversations can help to set expectations and ensure your existing or upcoming financial support doesn’t overstrain your own resources.<\/p>\n\n\n\n

Refine your decision-making skills  <\/h2>\n\n\n\n

You can help yourself to stay on track toward your financial goals by identifying any thoughts, emotions or habits that may be steering you off-track. This can be all too common when it comes to money. <\/p>\n\n\n\n

While classical economics assumes people make rational choices, this isn\u2019t always the case. There is a field of study that investigates the psychology behind economic decision-making, and how your feelings impact it: behavioural economics<\/a>. This work sheds light on how people tend to base decisions on intuition and emotions rather than facts and analysis.<\/p>\n\n\n\n

Maybe, for example, you\u2019re considering downsizing\u2014but then some friends of yours struggle to sell their home or don\u2019t like their new life in a condo. Now, you\u2019re more reluctant to list\u2014even if those friends live in a different city altogether.<\/p>\n\n\n\n

Here are some ways even experienced investors can get tripped up and make decisions that won\u2019t benefit them in the long run: <\/p>\n\n\n\n