Financial strategies tailored to you

In your 50s
Goal: Freedom 55
Retirement planning will help you determine when that dream can become a reality. Conventional wisdom says that you should plan to live on 70 per cent of your salary, but Bird cautions that this may or may not be realistic. "Seventy per cent of  $200,000 is $140,000, which is quite comfortable to live on, but 70 per cent of $40,000 is $28,000, which is a lot tighter," he explains. You need to determine whether you're going to live like a prince or a pauper in retirement and then evaluate whether and when your income sources – RRSP, company pension, government pension plans, old age security, investments, etc. – will cover your expenses, taking inflation into account. A certified financial planner can help you make this assessment. As for early retirement, Tillman says your income sources would need to be able to cover current and future obligations. "The person ready to retire early has typically been saving for some time and has little debt."

Goal: Second property
Some people are keen to purchase a second property – a cottage, a vacation home or an investment property. Even if you've paid off your first mortgage, be sure you can come up with the 20 per cent down payment for the second property without disturbing the equity in your first home because, as Tillman explains, there are many other expenses that go with owning a second property.

Going off the rails
"People in their 50s often underestimate how much they need to save to generate a sustainable income in retirement," says Tillmann. Additionally, a high income is not a guarantee of a comfortable retirement; you need a retirement plan. 

Best financial bet
Retirement planning is key.

What to do with your income tax return?
Pay off any non-mortgage debt. If that isn't an issue, put the refund on any unused RRSP (contribution room from previous years).

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