The deadline to contribute to your Registered Retirement Savings Plan for the 2015 tax year is quickly approaching – it’s Monday February 29, 2016.
Investing in an RRSP is a valuable financial planning tool that helps you save for retirement as well as receive a tax deduction, which means more money for you and less for the government. Even with these benefits it’s sad to say that sometimes the priority of saving in your RRSP gets left behind.
In todays world it is more about spending now, so saving for retirement takes a back seat on the list of priorities. But it shouldn’t. If you’re still deciding whether to invest in your RRSP here are some benefits to consider that may help you with your decision:
Do you want to retire someday?
If the answer is yes – and I’m pretty sure it is for almost everyone – then you need to save in order to do it. Unfortunately government and employer benefits may not be enough income to sustain your lifestyle in retirement. Therefore you need to set aside a part of your monthly budget and start investing for your retirement.
Think about saving for the long term
If you’re in your 20s, 30s, or 40s your retirement may seem far away, but the sooner you start saving the less it will cost you. Why? Because the longer timeframe you have to save the less money you need to contribute on a monthly basis.
You can click here to use the saving/retirement calculator where you can see that saving $100 per month from 25 - 65 and earning a 4% return will give you $118,690. If you started saving at 45 years old instead you will have to save more like $320 per month for a similar outcome. Save yourself some money now, start saving sooner, and have more later.
You can have more than one goal
No one says that you can only have one goal at a time. Working towards multiple goals helps achieve multiple dreams and hopefully saving for retirement is one of them. It’s definitely possible to save for more than one goal at a time, the key is to set priorities and decide where your money goes.
If you want to take a dream vacation in five years and you’re going to retire in 20 years then your financial priority will be the once in a lifetime vacation because it’s in the near future. However, that doesn’t mean your RRSP gets neglected, it just means that you can adjust your contribution since you have a longer time horizon.
Let’s talk and get started achieving your goals
As a Financial Advisor I can help, if you want to discuss your financial goals and learn how to set saving priorities contact me at: email@example.com today and let’s chat. I’m happy to help set a budget, delegate savings, and work together to help achieve all your goals – including planning a happy retirement!
PS: there is much more to know about RRSPs!