RRSP or else








RRSP, TFSA, Mortgage, Kids education.  What should you focus on this year?  RRSP deadline is coming up soon and every year, you are debating whether you should make a contribution and for how much.  There are so many bills to pay, things to buy and retirement seems so far away.

A study conducted by ING direct last year stated that retirement was cut short for 30% of older Canadian retirees in 2013. Having to “Un-retire”  and go back to work  is a very sad and unpleasant life event. One, nobody should have to go through.  This happens  with  lack of planning. 

The true answer to the question  above is that you have to do a bit of everything.  Just like a mortgage, you need to pay into your retirement over many years.

The amount of saving required is huge to provide an indexed income from age 60 to 90 or more. Most do not have a pension plan or if they do, it may not be enough to cover the current lifestyle.  Planning way ahead and saving systematically, every month or every year, for retirement will ensure that the saving required is manageable and retirement will be stress free and comfortable.  If you wait too long, the amount of annual saving gets bigger and bigger. If you start early, the interest compounding  takes care of it.

Your annual review meeting will determine how much you have to save to:

  • have the retirement lifestyle you want
  • have the mortgage paid off by retirement
  • how much to save for the kids education
  • how to save for an emergency fund
  • get all the tax savings you are entitled to
  • whether RRSP or TFSA is best for you
  • and a whole lot more.

Never underestimate the power of planning early and saving systematically!