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 for 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 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.


  1. Vanessa Marko

    Stop using your change! A great way to save extra money is to put your coin change after each transaction into a jar. Every month, transfer the change to your savings account. It’s amazing how much you’ll save before retiring!

  2. Shaun Somers

    I actually think getting out of non-mortgage debt should be of higher priority than saving for retirement – at any age. I think it’s important enough to even stop automatic retirement savings in order to focus on debt repayment.

    I know that can seem like financial heresy, but personal finance is emotional. Hopefully the thought of all the retirement fund growth you’re missing out on will encourage you to work extra hard to get out of debt so you can once again start saving for retirement!

  3. anna

    I agree! Watch your debt! No one wants to spend their hard-saved nest egg paying interest and credit card debt! Even worse, you don’t want to have to put off retirement because you just have too many bills to pay off. Be sure to put some ‘extra’ cash aside in that budget Jim is talking about. You’ll be less likely to turn to credit if you have some ‘fun money’ to spend.

  4. Tom

    I’m in my late 20s and I have around $15,000 in RRSP savings already. Here’s my challenge – I’m still renting a house and my savings for a downpayment ($3000) are growing very slowly as I have been prioritizing RRSP savings over house downpayment savings – what do you suggest in this case?

    • Jim Yih

      What about using your RRSPs for first time homebuyers?

  5. Ken Faulkenberry

    This is such an important subject. If people only understood the how compounding works and the importance of starting EARLY. I have written an article with an example and illustration of the importance of starting early at:

    Thanks for another article on a very important subject. We need to get the message out!

  6. David Leonhardt

    Starting early makes it so much easier later on. You have more freedom throughout your life. Not everyone can afford much when they are young, but everyone can afford something.

  7. Harshit @ SmartMoneyJunction

    You have mentioned that 20 somethings should save 10% of their income but that is a bit too less as per my liking. Perhaps if they could step up their savings to 20% of their monthly income, that would make a large difference in their net worth later on.

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