RRSP/TFSA strategies for you

Whether you are just starting out, in middle age, or getting ready for retirement, there are different age-related strategies to follow in building a robust retirement strategy.

With only a small percentage of Canadians covered by an employer pension plan (about 40%, according to Statistics Canada), many of us will have to look after ourselves in our retirement years. The Registered Retirement Savings Plan (RRSP) and the Tax-Free Savings Account (TFSA), are important investment tools. Here are some key strategies to keep in mind at various stages in your life:

Your 20s & 30s

If you walk away with just one pearl of wisdom at this early stage in your life and career, it's this - do not waste your biggest asset: time.

Even the smallest savings at this stage can become significant 30 or 40 years down the road. Properly invested, money you put away can potentially grow at a steady pace until you are ready for new growth strategies in later years. Consider starting out with an RRSP.

Consider the following advice:

• Divert money from your paycheque to your RRSP regularly (even a minor amount helps).
• Take advantage of matching employer contributions to your RRSP.
• Try hard to develop good savings habits.

Now is the time to start developing a relationship with an advisor. Don’t worry that you don’t have major investable assets yet. A good advisor will provide a solid sounding board for your ideas and goals and provide guidance to help you work toward achieving your goals.

Your 40s

By now, there will be many different interests competing for your money. To get on track, it's critical to have a relationship with a good advisor to help identify an appropriate financial strategy. You should begin thinking of longer-term goals, such as envisioning your retirement objectives and choosing a path to help get there.

If you already have savings in place, this is the time to determine whether your money is working hard enough for you. With the help of your advisor, review your RRSP’s asset allocation and risk strategy, and consider whether a TFSA is an additional savings option.

Your 50s

For many, these are the years when income potential is peaking and that means having a very clear picture of what you are spending year-to-year, and whether you are on a path to live the lifestyle you desire in retirement. Your advisor can help you determine whether you are contributing enough to your RRSP and TFSA to meet future goals. Again, you may also want to re-examine and lower your exposure to market risk in your investment portfolio, including your retirement savings plans.

Your 60s

Whether you are ready to retire or just considering another chapter in your life, this is when you will begin taking a hard look at your income needs year-to-year, your outside sources of funds and how you want to spend future years.

You need to review your retirement income needs, sources of retirement income, and whether you are on track to meet those needs. The reality is that your portfolio must not only provide for your current income needs, but also 25 years from now. A trusted advisor can help guide you through the various strategies.

Before the RRSP contribution deadline, make sure you have a detailed discussion with your financial advisor about the different strategies that are available to you to make an informed decision.

Speak to us today to find out what is the right fit for you!