Canada’s aging population and the ongoing/impending retirement of baby boomers has attracted a great deal of attention. And, rightly so. A report on senior’s finances from the Broadbent Institute produced several staggering numbers. One of them was that half of Canadians aged 55 to 64 who don’t have an employer pension have less than $3,000 saved up for retirement ICK.
Are you concerned about retirement? Here are five tips to aid you in your quest to build a retirement fund.
Automate your savings
Hands down, the best way to save for retirement is to automate the process. You can easily set up an automatic transfer to your registered retirement savings plan (RRSP) or tax free savings account (TFSA) every time you get paid. Heck, start with $25 a month if you have to. Remember, Rome was not built in a day.
Start saving early
Always start saving as early as you can. Ask any retirees and they always say the same thing – they should have started earlier and saved more. It makes sense because starting early gives your money more time to grow, and compound interest can really work some magic with your money. However, if you fail to take advantage of your time and keep postponing your retirement goals – you will have less than $3,000 in your savings come retirement.
Sеt a retirement income plan
It is important to create a retirement income plan well before you plan to retire. This will give you an estimate of how much you need to save. Mауbе your plan is tо put a сеrtаin реrсеntаgе or аmоunt intо уоur retirement account. Maybe you’ll get more creative. Your retirement income plan will give you the flexibility when you retire.
Take advantage of your TFSAs and RRSPs
The main idea of both accounts is to get a tax break. With RRSPs, you get a tax break when you put in the money. However, you have to pay tax when you withdraw the money. In contrast, TFSAs have no tax deduction when you contribute, but when you cash out the money come retirement time, you keep everything. Yum!
In fact, one of my favourite personal finance columnist states that TFSAs are you ticket to a tax free $1-million.
Stop leaving money on the table
Many Canadians are not taking advantage of pension plans offered by their employers. I always scratch my head when I hear this. How dare you give up free money!?
For instance, if you put in $1500 – you would receive a matching $1500 contribution from you employer. Some of my co-workers put in nothing and they receive nothing back.
Now that you have some great tips on how to build for your retirement savings, you are ready to take action and feed your retirement fund with lots of cash. Dear reader, never ever leave free money on the table offered by your employers. This is a great opportunity to boost your retirement savings.