The Best Time To Start Your Retirement Savings Plan

The Best Time To Start Your Retirement Savings Plan

At a young age, you would have a hard time figuring out what retirement may look like. For most people, major events usually start at 40. The truth is, the earlier you set foot towards saving for your retirement the better harvest you can reap in the future. This means that you should find ways to earn money as teens. Besides, saving early will likely give you the capacity to fulfill whatever financial goals you have in the future.

Furthermore, Sun Life Financial Canada conducted a survey that reveals that late bloomers are feeling pressure on their financial demands. They’ve found out that one of the five retirees is reported for making mortgage payments while 66% of which are carrying credit card debt, 26% are holding auto loans and some others are in debt due to their health care expenses, holidays and home restorations. These could have been prevented if they’re able to find ways to save for holidays and other leisure.

The point is, several seniors were not able to save nor prepare for retirement. In fact, most of them are carrying a large number of debts. To shun this financial tension in your retirement age, here are the steps that will guide you on how to start your retirement savings.

Steps To Start Your Retirement Savings

• Make a Retirement Savings Plan

An automatic contribution would be the most efficient way to start saving. Through a payment schedule that you’ve set up, you can ensure that your savings are being set aside every time you get your paycheck. You can nominate a certain amount that will go for your RRSP or Registered Retirement Savings Plan.

In general, you should target saving at least 10% of your pre-tax income in your RRSP. This may include your work pension or even your own savings.

On the other had another survey conducted by the TIA, which is a leading retirement services provider based in the U.S states that women who prefer to take time towards having children should be saving more. The survey suggests that 18% of their pre-tax income should equate to the amount of their savings.

• Internalize Your Savings Goals

To fire up your retirement savings, you need to plan and make it as your goal. Also, you have to picture out how you want to live your retirement years. Though this can be very challenging for young Canadians, putting this goal in place early allows you to enjoy your retirement years.

Additionally, in a poll named: Am I Saving Enough to Retire by the CIBC revealed 32% of Canadians aging between 45 to 64 saved nothing for retirement, while 53% of Canadians assume that they haven’t saved enough. Now, it’s time to shun the financial tension by putting your goals early.

• Calculate Your Retirement Savings

You can utilize the retirement income calculator provided by the Canada Revenue Agency to give you an idea of your future retirement income. So, whether you ‘re able t save today or for a couple of years, this will give an estimate of your retirement income. Significantly, it gives you a sensible idea of the amount that you should be saving for your retirement.

• Make Use of Your Retirement Resources

There are several ways on how you can save for your retirement. You can use your TFSA or Tax-Free Savings Account or your RRSP. The RRSP delays income tax until you’re set to withdraw the money you’ve contributed. TFSA in contrast, allows you to grow your money without an income tax bill upon withdrawal. This is because TFSA contribution is already subject to income tax. However, for those with a lower income bracket, TFSA might be more profitable. 

While if you are in the top marginal tax bracket, you may find RRSP more advantageous. Additionally, if you have an employee pension plan, make sure to take advantage of the benefit that you can get from it. Most of the time, your employee pension plan is likely to match your contribution; so be sure to put up the maximum amount if you can.

• Seek a Professional Advice for Retirement Planning

It is advisable to seek help or work with a financial advisor in terms of planning your retirement. However, you must be ready to face the fees at stake and the products that they will possibly recommend for you. Besides, a good financial advisor will take a look at your finances and all investments. Conversely, you can also do it yourself by opening your account to start up your retirement savings.

So, if you’re looking for the best time to start, that time is now. Even though it is better to start at a young age, older Canadians can still craft their path and make it possible for them to obtain their retirement savings. The key is your attitude and the likelihood to achieve well-off retirement years.