Worried About Retiring Broke? Do These 3 Things

Retiring broke is a possibility if you don’t plan well. Act with urgency by eliminating the obstacles early on. Save as much and invest in safe, indestructible dividend-payers like the Fortis stock.

| More on:

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

The worst that could happen in retirement is living penniless. It sounds terrifying, but it’s true. Many people are already on the financial edge before retirement. In Canada, a 2019 poll by BDO Capital Ltd. reveals that 53% of Canadians had little disposable income and that debt is an overwhelming 25%.

The reason why only a few are winning the retirement game is the over-reliance on debt to support living expenses. A situation when you are unable to pay an unexpected $200 expense without obtaining debt is dangerous. If you have affordability issues and debt challenges, you will end up retiring broke.

1. Save before you spend

Ironically, people fear losing money, yet they spend more than they save. To avoid retiring in poverty, you must take control of your spending habits. Think savings before spending. When you borrow, you’re forward-spending your future earnings. If you don’t stop this vicious cycle, you won’t have money to save for the future.

2. Invest your money

Canadians will rely on the Old Age Security (OAS), Canada Pension Plan (CPP) and a few thousands of savings in retirement. It’s a positive step except that hoarding cash will not provide the financial security you would need as a retiree. Investing will enable money growth and the building of ample wealth.

3. Stay invested

There are risks in investing, particularly in the stock market. However, stocks are the best long-term investments for would-be retirees. When you go into stock investing, don’t bail out if the market goes haywire. It’s not always a smooth ride, so you’ll have to understand the risks and manage them.

The 2020 pandemic is an example. Often, a declining market is a buying opportunity. Some stocks are losing, while others are rising in value. The key to overcoming the volatility is to choose assets that can endure the market’s ups and downs.

Indestructible asset

On the TSX, Fortis (TSX:FTS)(NYSE:FTS) is the quintessential investment for all generations of investors. This $24.65 billion regulated electric and gas company has bond-like features, defensive in nature, and pay dividends regardless of destructive forces like COVID-19.

Fortis is full steam ahead in fulfilling its $19 billion capital program that should increase its rate base to $34.5 billion by 2022 and $38.4 billion in 2024. The rate base in 2019 was $28 billion. This long-term runway ensures sustainability to pay dividends. Management has a promise to raise dividends by 6% annually through 2024. This top-tier utility stock is currently paying a 3.57% dividend.

A $10,000 investment in Fortis will produce $357 in passive income. If your holding period is 20 years, the value of your investment will be 20,168.78. Assuming your savings is 10 times more, the money growth follows the same trajectory. You shouldn’t worry about reliability, either. Fortis has been rewarding investors with dividends for 46 straight years.

Achieve your retirement dreams

Many people rarely achieve their retirement dreams for lack of foresight and urgency. Change course and chart your retirement journey the right way. Start balancing, if not eliminating, your debt obligations. Save as much as you can and invest. Follow through until you reap the rewards on retirement day.

Should you invest $1,000 in Fortis right now?

Before you buy stock in Fortis, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Fortis wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,345.77!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 24 percentage points since 2013*.

See the Top Stocks * Returns as of 4/21/25

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 FORTIS INC.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

Piggy bank with word TFSA for tax-free savings accounts.
Dividend Stocks

How I’d Structure My TFSA With $14,000 for Almost Constant Monthly Income

These four choices could make any $14,000 investment a strong one, especially with solid dividends that will stand the test…

Read more »

Muscles Drawn On Black board
Dividend Stocks

The Best Canadian Stocks to Buy Right Away With $4,000

Seeking strength from your investments? Then these are the three stocks to consider first.

Read more »

worker carries stack of pizza boxes for delivery
Dividend Stocks

I’d Invest $8,000 in These 3 Monthly Dividend Stocks for Passive Income

These three monthly-paying dividend stocks with high yields could deliver a stable passive income.

Read more »

money goes up and down in balance
Dividend Stocks

1 Magnificent Canadian Stock Down 22% to Buy and Hold Forever

This could be a rare opportunity to buy this unique income and growth stock.

Read more »

monthly desk calendar
Dividend Stocks

This 6.6% Dividend Stock Pays Cash Every Single Month

A high-yield renewable energy stock paying monthly dividends is a brilliant choice for income-focused investors.

Read more »

man touches brain to show a good idea
Dividend Stocks

The Smartest Canadian Stock to Buy With $1,500 Right Now

Restaurant Brands International (TSX:QSR) stock could be a great pick-up with $1,500 this spring!

Read more »

Canada day banner background design of flag
Dividend Stocks

The Top Canadian Stocks to Buy Right Now With $5,000

These three Canadian stocks are top choices, especially for those wanting growth with a $5,000 investment.

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

Retirees: 2 Top Dividend Stocks for TFSA Passive Income

These stocks have increased their dividends annually for decades.

Read more »