For many Canadian retirees, travel to sunny destinations during the cold long winters is at the top of their bucket list, and who can blame them. Particularly when winters can be more stressful for seniors. To ensure your RRSP can fund travel costs, you need to make sure you save enough and that you’re invested in the right portfolio. Here are some tips to get you started.
If your retirement goals include being a snowbird, here are some tips to help you get the most out of your RRSP to ensure you save enough.
Maintain Your Purchasing Power
Over time, prices increase. This is the effect of inflation. For example, $100 in 1999 was equivalent to $140.28 in 2017. As a result, inflation will also push up prices of flight and accommodations.
One of the best ways to ensure your investments keep up with the rate of inflation is to be invested in a diversified portfolio of bonds and equities. Together, the mix of investments should provide the potential to deliver a return that’s greater than the inflation rate, which on average hovers around 2% in Canada. Lately, however, Canada’s inflation rate has been low, but this may change as an increase in wages, gasoline prices and other goods and services can stimulate inflation.
Healthcare – Don’t Leave Home Without It
Another cost that you will need to save for is private health insurance. Private health insurance premiums generally go up as you get older. Also, the longer you stay outside of Canada, the more the premiums will cost.
Unfortunately, coverage from our provincial health insurance program for medical care administered outside of Canada is very limited and includes residency requirements. For example, Ontario residents need to be in the province for 153 days each year to be eligible for medical coverage outside of Canada.
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Get the Most Value From Your Money
To fly south means you need to save more now and invest wisely, but we’re not suggesting that you should give up your $5 weekly coffees to do this.
Instead, look at the expenses that are not adding any value to your money and life. Investment fees can often fall into this category. Canadians pay the highest fees in the world but this does not mean they get better investment returns. Instead, the returns often lag behind low-cost index ETFs. See for yourself. Try our free calculator to see how much wealthier you can be by investing in our low-cost Index ETFs.