Plan for unexpected job loss, sudden career changes

A changing job market and turbulent economy has resulted in many Canadians experiencing unexpected job loss, sudden career changes, and retirement at an earlier- or later-than-expected date. These shifting circumstances can have a significant impact on your finances, leaving you feeling unprepared or unable to manage. There may also be times when you have to leave the workforce for a brief period of time, such as to care for a parent or child.

When working through these considerations to assemble or update your financial plan, also keep in mind that recent data suggests that the average number of years in retirement have increased, by 54%, from 13 to 20 years, or more. With so many potential career changes and Canadians living longer in their retirement years than ever before, how do we prepare for the unexpected and successfully fund our standard of living?

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We’re helping more and more clients create and update their financial plans after leaving the workforce. From providing advice on defined benefit pension plans vs. defined contribution plans, to advice on updating their financial plan, Canadians are looking for guidance and we’re here to help them.

Here are some tips on how to keep you financial plan up-to-date:

  • Set up an emergency fund. A general rule of thumb is to set aside three-to-six months’ worth of expenses. One place to keep this is in a Tax Free Savings Account, where you can contribute up to $5,000 annually.
  • Pay off as many expenses as possible before you leave the workforce (whether permanently or just temporarily). Start with debt (the highest interest rate first), and then other expenses such as your car or home repairs.

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  • Streamline your savings and investments. Compare fees on your different investments and savings accounts, and decide what is offering the most value and long-term security. Paying even 1% less in fees and expenses may make a big difference. Talk to your Financial Planner, who has the expert skills and industry knowledge to help you make the right decisions.
  • Create and follow a realistic budget. Start by taking a close look at the total amount that you have saved, and use that as the starting point to build your budget. You will also need to determine how much you will withdraw from savings and investments each year to cover your expenses. Consider all of your expenses: you don’t want to underestimate how much you will need.

[Got a financial question? Experts respond to your pressing money dilemmas]

    Saving for financial freedom doesn’t have a hard start or stop date. It’s an evolving process. The trick: spend less without sacrificing quality of life.

    GoldenGirlFinance.com is a free personal finance and education site for women.

    Read more from Kim Parlee on GoldenGirlFinance.com

    Nothing contained herein is intended to provide personalized financial, legal or tax advice. Nothing should be construed as an offer to sell, or a solicitation of an offer to buy a security, a recommendation for any product or service by Golden Girl Finance or any associated third party, or a suggestion regarding the purchase, holding or sale of securities. Before implementing any financial strategy, you should obtain information and advice from your financial, legal and/or tax advisers who are fully aware of your individual circumstances.

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