Retirement planning isn’t simple. You need to work with a financial adviser like us to determine how much you should be saving, and where it should be invested. But if you have determined that there is a place in your plan for RRSP contributions, take the stress out of RRSP season and set up a monthly PAC.
It is a lot easier to make 12 contributions of $200 each than scramble around for a $2400 lump sum in February. Many studies of behavioural changes show that it is the small steps that make the biggest difference. Introducing small changes over time assures long-lasting results. The rule of thumb for saving is to put away at least 10 per cent of your income every year. How many of us do that?
The famous Wealthy Barber, David Chilton, wrote about the importance of Paying yourself first. If you can’t afford 10 per cent, start with 5 per cent. Savings over time harnesses the power of compounding as your money is working for you all year. Investing directly into the market? PACs will also take advantage of dollar cost averaging.