Nine ways to take control of your retirement

What does retirement look like for you? Maybe you plan to have paid off your mortgage and to spend more time with your friends and family at a cottage. Or perhaps you want to learn how to make sushi with your partner or take up yoga? Whoever you plan to spend your retirement with and whatever you want to do, you should know that millennials in particular are expected to live longer and have more debt to pay off when they retire than your parents did. And that puts you in a tough place when it comes to how much you need to save for retirement so you can do the things you enjoy.

While one way to take control of your retirement is through a workplace pension plan, not everyone has access to one. A study commissioned open new window by the Canadian Centre for Policy Alternatives found that a growing number of Canadians are working in non-traditional jobs, including roles in the ‘gig economy’ or through self-employment. And many entry level jobs and start-up companies which employ young Canadians don’t offer pension or retirement savings plans.

Young woman standing in front of a farmer’s market with her arms full of vegetables in baskets

Erin is maxing out every retirement savings option

Erin is 25 and lives in North Bay. Her parents are small business owners and have to fund their retirement on their own, so she has long recognized how important it is to save for retirement. She is lucky to have a defined benefit pension plan at her workplace, which is the core of her retirement savings plan. Even so she makes a point of maxing out her TFSA contributions each year – she’s read it’s a better way to save for retirement when you’re young and in a lower tax bracket, and she has no intention of touching that money unless she needs it for a down payment on a home. She also makes regular contributions from every paycheque to a couple of high-interest savings accounts, in addition to GICs, mutual funds and exchange traded funds (ETFs), and has recently become more comfortable with stocks, but considers those more for general savings than specifically for retirement.

If you don’t have a workplace pension plan, do not fear. There are alternative ways that you can take control of your retirement planning. Even making “baby steps”, you’ll be rolling up those California rolls in no time! Do all or some of the following things:

  1. Knowing how much you may need when you’re retired is the first step in taking control of your retirement planning. Use the Government of Canada’s Retirement Income Calculator to help you. Visit Canada Pension Plan’s website open new window to learn more and begin using the calculator.
  2. Gather what you need to start seriously planning for retirement. Visit Making a retirement plan to see what information and details you should gather to enable you to make informed financial decisions.
  3. Open up a personal savings plan like a Registered Retirement Savings Plan (RRSP) or a Tax-Free Savings Account (TFSA) at any bank or financial institution and put whatever you can afford into it each month – even $50. Invest smartly depending on how long your money will be invested and the level of risk you can take. If you’re in your 20s you can be more aggressive with your investments and watch your money grow with the interest you receive from those accounts. Learn more about this option by reading Personal Retirement Savings.
  4. Set up automatic transfers from your bank account to your RRSP or TFSA for every paycheque. This way you can grow your savings without having to even think about it. You won’t spend what you don’t have in your wallet!
  5. Look for future employment that provides a pension plan: when reviewing a job offer, in addition to the salary you should always look at the benefits and if they have a workplace pension plan or retirement savings plan. Consider accepting a job offer that has a pension plan, even if the salary is slightly lower, but the total compensation including the employer’s contribution to the pension plan, is higher. Read more about this in What’s in a job offer?
  6. Descriptive transcript: Save your salary bump open new window

  7. Save your salary bump: did you have a great month of freelance work? Or perhaps you got a salary increase or quarterly bonus? Whatever it is, put some or all of that extra money into your TFSA or RRSP. Remember that if you put money into an RRSP you’ll get a tax benefit when you submit your annual tax return.
  8. Put gift money away: did you get money as a gift for your birthday or during the holidays? Or did you receive some inheritance money? Whatever that gift money is, save it now. Put all or some of it into your RRSP or TFSA. You didn’t have it before, so why not save it while you can?  
  9. Invest your tax refund: did you get a tax refund? While it’s tempting to want to splurge on a new phone, why not put some or all of that refund into your RRSP or TFSA?
  10. Check out our Online retirement planning tools to help you plan for retirement.

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