It's never too early to start planning for your retirement.
Are you wondering what life will be like for you when you're 75?
Work with a Gulf & Fraser retirement planner so that when the time comes for you to retire, you are financially ready.
With modern medical advances and increased standards of living, Canadians can plan on spending one fifth of their lives in retirement. Everybody has heard it before, "It's never too early to start saving for your retirement." It's true. The effect of compound interest is significant.
Planning for retirement can be overwhelming. But no matter what age or stage of life you are in, there are many options. Depending on your age, stage in life, goals and expectations, your retirement plan will vary. That said, below are some general guidelines on developing the best retirement plan for you.
Your 20s: A smart time to start
If you are in your 20s, saving for retirement is probably the furthest thing from your mind. Buying a home seems a million years away, let alone retiring. While you probably still have a student loan, now is typically the time when you start a salaried position and begin to earn regular paycheques. If you have any debt, paying that down should be your first priority, especially if you have anything owing on your credit card.
Your 20s are also a smart time to start contributing to a Registered Retirement Savings Plan (RRSP) because time is on your side. The power of compound interest means that your hard earned money can grow exponentially. And contributing isn’t as daunting as it sounds. If you can afford to buy a $5 latte a few times a week or spend $40 on a night out, you can afford to contribute to an RRSP. Every little bit counts!
A Tax-Free Savings Account (TFSA) is also an option. There are pros and cons to both RRSPs and TFSAs. Your Gulf & Fraser advisor can help you decide what best fits your needs and your retirement planning goals.
30s: Settling into a plan
In your 30s, you probably have a steady income, but you might also have more expenses—transportation costs, rent or maybe a mortgage, or even a baby.
If you don’t already have a financial plan, it would be a great idea to create one. If you made a financial plan in your 20s, now’s the time to revisit and revise your plan to ensure it's still serving your needs.
While you might have more pressing expenses, don’t let that be an excuse not to contribute to your retirement plan. Pay yourself first by setting up a Pre-authorized Contribution (PAC) from your paycheque directly into your RRSP and you will hardly notice a difference at the end of the day. Now is also a good time to assess your overall investment risk tolerance and think about incorporating higher return investment vehicles. You have plenty of years until retirement so you don’t have to worry about short-term market fluctuations.
