When and how should you start saving for retirement?
Saving for retirement should be a priority no matter your age. The earlier you begin planning, the bigger your nest egg and the sooner you can retire comfortably.
Unfortunately, most people don’t start thinking about retirement until they’re in their thirties or later, but putting funds into a retirement account in your twenties can mean extra thousands of dollars saved.
Even if you are in your forties or fifties, there’s no time like the present to start saving.
If you have the luxury of starting young, develop healthy financial habits. Plan a monthly expense budget, pay your bills on time and contribute to a savings or retirement account.
Twenty-somethings have the advantage of making long-term investments and allowing savings interest to accumulate. Try to set a goal of saving 10% of your monthly paycheck and make your RRSP contributions automatic so you never have to think about transferring funds into your account.
Avoid borrowing from your RRSP once it’s established and don’t cancel those automatic contributions. Allowing your RRSP to ripen is the best possible thing you can do at this or any age.
By your thirties, you should bump up your RRSP contributions to 15 or right up to 18%. To err on the side of caution, consider other investments.
Buy commodities such as gold and silver. Precious metals are proven investments that will increase in value over the next twenty to thirty years.
You may also consider investing a specified portion of savings in the stock market or foreign exchange market, although these are riskier than most options.
If your portfolio takes a hit in the bad economy, don’t panic. You still have time to let your funds accumulate again.
You’ve probably saved quite a bit of retirement money by your forties, but if you haven’t started yet, do it now! The downside of starting late is that you need to contribute a bigger percentage of your income to your RRSP.
It isn’t impossible to save enough beginning in your forties, but you may want to seek the advice of a financial adviser to see where you can invest without encountering much risk.
The same goes for beginning to save in your fifties. You already know you won’t be able to retire by age 65, but if you plan it right and save smart, you can retire by your seventies.
Draw up a budget of your dream retirement. Do you plan to travel? How much would it cost if you needed to do home or car repairs? Can you afford your ideal lifestyle on the projected amount of savings in your RRSP?
If you began saving far too late in the game, reassess your retirement dreams. Would you mind working a part-time or consultant job for a few years after retirement? Can you comfortably live off less than you intended to?
No matter your age, set up a retirement savings account if you don’t already have one and put aside every extra penny you can. Create a savings strategy based on your current situation and your future needs and enlist professional financial help if necessary.