Saving for retirement later in the game

In 1980, the average lifespan in Canada was 75 years; in 2010, it was 81. There was a time, not long ago, when the Canada Pension Plan (CPP) and old-age pensions were enough to retire on, but that is more and more a thing of the past, not only because we are living longer, but the cost of living and our expectations for retirement cost more money— whether it is to travel, golf, support children or spoil grandkids.

Approaching retirement with little or no savings can be scary, but there are some smart financial moves you can make today to make a comfortable retirement a possibility.

Some smart first steps to saving for retirement include paying off all debts, cutting spending and downsizing. Start with a clean slate from which to start saving and determine a budget you can live by today, and leaves room for saving.

Second, consult with a financial investment advisor at your bank, full service brokerage or other independent investment firm to help you set retirement goals and a budget for your retirement years.

Retirement age was once considered to be 65, then 69. Today, in 2017, we don’t have to convert RRSP assets until the end of the year we turn 71, making RRSPs a good option if you are looking for tax-sheltered investment with different risk profiles. If you are in a high-income bracket at age 60, starting an RRSP is a good bet because of the tax-saving benefits. For example, contributing $750 biweekly in a medium-risk fund (six-per-cent return) from age 60 gets an investor more than $300,000 by the time they are 71.

A TFSA, on the other hand is a good retirement savings option if you do not have a regular income, or your income does not allow for much savings. With a TFSA, there is no year in which you have to collapse the account like the RRSP. Using the same numbers as above in a TFSA calculator, after 11 years, an investor has saved over $88,000 in a medium risk investment. If you decide to sell your home or a secondary property, a TFSA is also a good place to put the money—you can contribute up to $52,000 for the 2016 tax year if you have never contributed to your TFSA.

Invest your cash. If you are sitting on cash, it doesn’t have the same potential to grow in a savings account or under the mattress as it does in an investment. Even if you are a conservative investor, your money can still grow significantly bigger in a low-risk investment account.

Plan to work for longer, whether that is in contract work, or the job you presently hold, or something new, people often hold their jobs well into their 70s.

Retirement looks different for everyone. No matter your first move for saving for the future, remember it is never too late, and today is a great time to start.