How to Save for Retirement

To save for retirement, start by estimating how much income you may need after you stop working. Then look at what you may receive from CPP, OAS and workplace pensions.

The remaining amount can help you determine how much you need to save yourself. Starting earlier can make the goal easier because your money has more time to grow.

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Figure Out How Much You Need

Start by thinking about the lifestyle you want in retirement.

Estimate future expenses such as:

• Housing

• Groceries

• Transportation

• Healthcare

• Travel

• Insurance

• Entertainment

Next, estimate your expected retirement income. This may include CPP, OAS and an employer pension. Personal savings can help cover the difference.

Start Saving as Early as You Can

You do not need to wait until you can save a large amount.

Starting with a smaller contribution gives your money more time to grow. You can increase the amount later as your income changes.

Saving consistently can make a large retirement goal feel more manageable.

Automate Your Retirement Savings

Consider automatically moving part of each paycheque toward retirement.

You could start with a percentage of your income or a fixed dollar amount. Choose something that fits your current budget.

Increase the contribution when you get a raise or have more room in your budget.

Consider an RRSP

A Registered Retirement Savings Plan (RRSP) is designed for retirement savings.

Eligible RRSP contributions can reduce your taxable income. Investment income inside the account is generally not taxed while it remains in the RRSP. Withdrawals are generally taxable.

Your available contribution room depends on your personal tax situation. Check your CRA information before contributing.

Consider a TFSA

A Tax-Free Savings Account (TFSA) can also be used for retirement savings.

A TFSA can hold cash or investments. Eligible income and growth inside the account are generally tax free.

RRSPs and TFSAs have different tax treatment. You can use one or both depending on your financial situation.

Take Advantage of a Workplace Pension

If your employer offers a pension or retirement savings plan, understand how it works.

Check whether your employer contributes to the plan. Make sure you understand what you need to contribute to receive any available employer contributions.

Your workplace pension can become an important part of your retirement income.

Review Your Retirement Plan Regularly

Your retirement goal will change over time.

Your income may increase. Your expenses may change. Your retirement date may also move.

Review your plan every year or after a major financial change. Increase your contributions when you can.

The most important part of saving for retirement is starting and staying consistent. You do not need to have your entire retirement figured out today. Start with an amount you can afford and build from there.