Five ways to boost your retirement savings
BY INVESTING REGULARLY, YOU CAN MOVE STEADILY TOWARDS YOUR FINANCIAL GOALS AND THE RETIREMENT LIFESTYLE YOU WANT.
Here are five ways to better save for your retirement:
1. Understand how tax sheltering works
Your investments grow tax-free within your RRSP, providing the potential for increased growth opportunities. You can enjoy immediate tax savings because an RRSP allows you to deduct the amount of contribution from your income on your tax return.
2. Start early
It may not seem like much now, but starting to invest 10 or 20 years earlier can have a dramatic impact on your long-term returns.
3. Start a pre-authorized contribution plan (PAC)
Setting up a PAC, i.e., a regularly scheduled contribution to your RRSP that comes right off your paycheque or out of your bank account, can help build your savings with minimal effort. Don’t forget to increase your PAC or contribution amounts as you receive raises and get promotions. That way, you’ll always be investing as much as you can while also benefiting from compounding growth.
4. Make use of your company benefits
Many companies offer employee savings or contribution matching plans. Check with your Human Resources department to see if you can take advantage of any employee programs that will help you build RRSP savings faster.
5. Consider a TFSA as well
In 2009, the government introduced the Tax-Free Savings Account (TFSA) as an additional, tax-advantaged way for Canadians to save better. While investors contribute to a TFSA using after-tax dollars, whatever growth they generate in their account is tax-free, as are any withdrawals made. TFSAs can be a smart supplement to the RRSP when saving for retirement, but they can also be used to save for shorter-term goals such as a home, vehicle or vacation.