Want to Retire Faster? Try Doing These 3 Things

Canadians can fast track their retirement by having a best-laid plan. Investing in a blue-chip asset like Bank of Nova Scotia stock is a surefire way to build a substantial nest egg.

| More on:
Path to retirement

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Canadians over 40 who don’t have adequate nest eggs yet could be feeling a retirement rush. The situation is worrying but not entirely a dead end. However, the hesitation in making a firm decision stems from the affordability to retire. Time is also the enemy.

The solution could be a mindset shift accompanied by a best-laid plan. If you want to fast track your retirement, you can implement three strategies to put you on course to retire sooner than later.

Estimate retirement expenses

The first step is to estimate how much money you’ll need to live comfortably in retirement. Ideally, you should maintain the same income as when you were working. In Canada, the Canada Pension Plan (CPP) and Old Age Security (OAS) are foundations of retirees.

If the CPP and OAS replace only 25% to 33% of the average pre-retirement income, there’s a need to fill the gap. More or less, you already have a ballpark figure to run after when you do your financial planning.

Downsizing could make a big difference

Why wait for retirement to downsize when you start frugal living today? Some would-be retirees have the foresight to curtail expenses to free up more cash for retirement savings. Likewise, if you live in a city with a high cost of living, move or relocate to cheaper places to retire in Canada.

Downsizing in preparation for retirement could make a big difference. You’d have the ability to amass a considerable amount of savings that you can use for investment purposes.

Find other income sources

Your CPP and OAS pensions are guaranteed incomes for life. However, you must have other sources that could provide pension-like income. The money you will save today should then go to owning income-producing assets. It could be bonds, mutual funds, GICs, ETFs, and dividend stocks.

Canadians are fortunate because there are investment vehicles dedicated to building nest eggs. Max out your Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP) investment accounts every year whenever possible. Sheltering investment income for taxes is what the top 1% of Canadians do to protect their wealth.

Blue-chip investment

Owning blue-chip stocks is part of the winning investment strategies of many long-term investors. The shares of Bank of Nova Scotia (TSX:BNS)(NYSE:BNS), or Scotiabank, for example, are among the assets you can buy today and hold forever. Its dividend track record speaks for itself.

Canada’s third-largest bank has been paying dividends since 1832. If Scotiabank had been sharing its profits with shareholders that long, another 20 years is very probable. The key is to accumulate BNS shares and reinvestment the dividends. At the current share price of $77.51, the dividend yield is 4.59%.

The local market contributes more than 50% to total revenue, while the rest comes from the U.S., Australia, Asia, Europe, the Caribbean, and the Pacific Alliance market. According to Brian Porter, president and CEO of Scotiabank, the bank’s impressive Q1 fiscal 2021 financial results reflect its diversified business platform’s strength.

Perfect for retirees

You can’t go wrong with having blue-chip companies to fast track your retirement goals. Apart from robust earnings history, stable dividends, and tangible assets, they recover quickly from downturns. The performance of Scotiabank in the 2020 health crisis is solid proof.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends BANK OF NOVA SCOTIA.

More on Dividend Stocks

energy oil gas
Dividend Stocks

2 High-Yield Energy Stocks to Buy as Recession Approaches

Energy stocks such as TC Energy and Canadian Natural Resources allow investors to generate income even in recessionary times.

Read more »

green power renewable energy
Dividend Stocks

3 Top Dividend Stocks to Drive Your Passive Income

These three high-yielding, safe dividend stocks could boost your passive income.

Read more »

protect, safe, trust
Dividend Stocks

TFSA Wealth: How to Earn $363 in Monthly Passive Income for Life

Canadian investors can harness the power of the TFSA to generate steady tax-free passive income for decades.

Read more »

Canadian Dollars
Dividend Stocks

TFSA Millionaire: How to Turn $40,000 Into $1.2 Million for Retirement

Here's how TFSA investors are using the power of compounding to buy top Canadian dividend stocks to build retirement wealth.

Read more »

edit Balloon shaped as a heart
Dividend Stocks

My 3 Favourite TSX Stocks Right Now

These three TSX stocks are my favourite performers. All have strong dividends, future growth, and historic performance behind them.

Read more »

Dividend Stocks

Passive Income Generator: 1 Dividend Stock Yielding 6.16%

A high-yield energy stock that pays monthly dividends is a reliable passive income generator for investors.

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

3 Cheap Canadian Dividend Stocks to Buy Now for Passive Income

Investors seeking quality passive income can now buy top TSX dividend stocks at cheap prices.

Read more »

edit Businessman using calculator next to laptop
Dividend Stocks

2 Oversold TSX Dividend Stocks to Buy for Passive Income

While these high-quality dividend stocks are oversold, they are some of the best stocks to buy for passive-income seekers.

Read more »