Red Portfolio Home > Planning for Retirement > Getting an Early Start
When it comes to your retirement,
there’s no such thing as ‘fashionably late.’
You know those shoes you bought last month? Comfortable. Wear-anywhere. On sale for $100. You thought, “What a great investment!” But had you invested that $100 in a tax-qualified retirement account, you’d now have something a bit more substantial.
One of the smartest moves you can make is to invest as much as you can in your company’s RRSP plan. If you’re self-employed, open up a savings plan account and invest in it monthly. After all, a comfortable retirement will never go out of style. Here’s how to build a respectable nest egg:
1. Pay Yourself
Make like you’re your own boss and put yourself on the payroll. Take care of the necessities—rent, car payment, credit card bills—then pay yourself by putting some of it into your savings before treating yourself to anything else.
2. Make it automatic
The government automatically deducts taxes from your paycheque to make sure they get paid first. The same principle applies here—save before you can spend. And since it’s easy to forget or get too busy, set up an automatic savings plan. Your money is put away before you even see it, so there’s no time to miss it.
3. Invest 12% of your income before taxes
Financial experts recommend men save at least 10% of their income. But since women live longer, many are now suggesting women save 12%.¹ Think that sounds like a lot? Then start with 6% or 7% and work your way up. You’ll be surprised at how quickly you’ll adjust—and how fast that money will add up.
4. Make it diversified
Since were talking about building a nest egg, we should also mention the importance of not putting all of your eggs in one basket. When building a portfolio, always know you cannot time the market. You just can’t. The best investment plans include investing in various asset classes. So if one should drop, you’ll still have money in others to balance it out.
Spousal RRSPs
In general, married couplies need to calculate their deductions separately, but spouses who earn little or no compensation can make full contributions to their own RRSPs. Each spouse can contribute up to the annual dollar limit to his or her RRSP as long as the combined taxable compensation is at least equal to their combined dollar limits.
What about my family? »