Five fresh tips for your RRSP savings
An RRSP can be one of the best ways to save for retirement. Not only do you benefit from tax-sheltered savings, you also get a tax break each year you make a contribution. The key to successfully saving for retirement is simply to start! Here are five fresh ideas to start saving in an RRSP. Find the ones that work best for you.
1 Start small
Start saving small amounts regularly, and gradually increase them rather than putting off saving. It's never too late to start saving. Small wins build confidence and help make saving a healthy habit. Another great benefit of making regular contributions is dollar cost averaging, which can lower the total cost of your investments over time. If available, take advantage of workplace financial wellness programs to better understand your money and to learn more about how a registered retirement savings plan (RRSP) can benefit you.
2 Let your employer help
If your employer offers a group RRSP, sign up to benefit from immediate tax breaks. A group RRSP contribution from your payroll immediately reduces the tax you pay because your employer deducts the contribution from your income before deducting tax. And if your employer also offers a matching program—which is basically "free money"—use it to build up your nest egg. The more you save, the more you get. Group RRSPs also typically offer more competitive investment fees than individual RRSPs, so your savings go even further.
3 Automatic payroll deductions
One of the great advantages of contributing to an RRSP regularly, especially through payroll deductions, is that the money comes directly out of your pay.
4 Goal-based savings
Instead of trying to use one savings account to do it all, organize your savings buckets (accounts) by goals. Some goals are short term, such as saving for a vacation or a car, while others are long term, such as saving for retirement.
Decide what percentage of your earnings should go into each bucket, then automate the process to make saving even easier. Group RRSPs with payroll deductions are an easy way to pay yourself first when saving for retirement. It's easy to spend money when it's sitting in your bank account, but paying yourself first, through automating your savings, helps you resist a natural inclination to splurge now and to put off saving for later. Reduce your temptation to overspend (and undersave) by setting up automatic transfers to your RRSP.
5 Team up with an advisor
Maintaining a regular savings and budgeting plan can be difficult. Having the right support from a financial advisor can help you stay on track in meeting your retirement goals. Some group savings plans include access to advisors, so check with your employer to see if this benefit is part of your group plan.
It's never too soon—or too late—to start saving
Start saving as soon as you can. No amount is too small to kick-start your savings. Your future self will thank you!
Ready to contribute to your RRSP today? If you have access to a Manulife RRSP, sign in now.
The commentary in this publication is for general information only and should not be considered legal, financial, or tax advice to any party. Individuals should seek the advice of professionals to ensure that any action taken with respect to this information is appropriate to their specific situation.