One of the most common realities I see is the 40-something individual with zero retirement savings. Life has had other priorities up until now, and entering their 40’s has provided a different perspective on time to retirement.

If this sounds familiar, here are my top 3 ways to tackle retirement saving differently, which will not only allow you to get ahead to reach your retirement goals but also protect you in the years leading up to that time.

Avoid the tax

Unless you need a tax deduction, instead of RRSPs for your retirement savings, max out your Tax-Free Savings Account first. By creating a pool of tax-free retirement income you’re empowering your dollars to go further. During retirement, the more taxable income streams you have (i.e. CPP, OAS, RRSP/RRIFs, and pensions/LIRA/LIFs) the more money you need to pay the tax bill. By focusing on building non-taxable income streams first, you’re not only lowering your tax bill but increasing your income flexibility.

Protect your retirement, fund your long-term care

If you’re ever unable to work due to critical illness, you’ll likely deplete your retirement savings to fund additional medical expenses, a family member’s time off work to help with care or medical appointments, and so much more. By purchasing a critical illness insurance policy, you can protect your retirement savings in the event of a critical illness diagnosis with a tax-free lump sum benefit. If you reach age 65 without needing to claim against this coverage you can convert it to a long-term care policy which would, later, provide a daily income benefit to cover in-home care or long-term care facility costs. This reduces or eliminates the need to increase your retirement income from other sources to cover the additional medical costs of aging.

Using your assets

Gone are the days when the family home was handed down to the next generation. Children move away from where they grew up or have their own family homes by the time their parents are looking to downsize. We’re also seeing fewer people able to afford mortgage elimination by retirement, which used to be the standard retirement rule.

Using the equity in your home to partially fund your retirement lifestyle may be a reality for you if you:

• focused on registered retirement savings or pensions that provide tax-inefficient and restrictive income support in retirement;
• focused on paying down your mortgage more than saving for retirement, or;
• are desiring to remain in your home throughout the balance of your retirement.

Before retirement, think ahead and ensure you have a secured line of credit (Home Equity Line of Credit) that will be paid off with the sale of your home if you need other living arrangements, or with your death. The flexibility that a HELOC will provide you when you have a traditional fixed retirement income is a must to fund certain lifestyle and estate planning needs.

Not sure how and where to get started? Just start saving, into a TFSA that’s actively invested according to your risk profile. Or, contact a professional to develop a retirement and financial plan custom to you and your needs.