Saving For Retirement
Finance Saving || Tags: Money ||Saving for retirement has always been intimidating to me. I have many years of work left, I have a job that doesn’t provide a pension and I will have to change jobs before I retire. There’s a reason most people don’t think about retirement until later in life; it’s scary. I have no idea when I will retire, how much money we will need, where we will be living, etc. Every time I think about saving for retirement I start thinking “Okay, how much money will we need” and I start researching. Of course this all depends on what you want your lifestyle to be when you’re retired, and at what age you’ll retire. I get super overwhelmed thinking about it and then do nothing altogether. This pattern has been going on for several years. I contribute bi-weekly to an RRSP but that’s as far as it goes.
I was recently reading “ The Behavior Gap” by Carl Richards and one chapter in particular stood out to me. “Plans are worthless”. Carl talks about how having a financial plan is worthless because we don’t have all the information. We don’t know what inflation will be, we could lose our job, get an inheritance, move abroad, or just about anything. Surprises happen, often. However the process financial planning is vital, a fluid process reacting to current events in your life.
“My point isn’t that we don’t need to plan. We do need to plan. But if we accept the fact that even the best plan will turn out to be a fictional narrative about the future, we can focus our energy on the process of planning instead of obsessing over the assumptions” The Behavior Gap by Carl Richards, page 101-102
The Most Important Thing Is To Start
This is exactly the advice I needed! Start heading in the direction you want to go, and if you need to change the course, change it and move on. Things rarely go as planned, so trying to plan 30 years in the future is crazy! Give it your best guess, save as much as you can and change the plans according to your life.
I contribute around 10% of my income bi-weekly on payday to an RRSP, and will be increasing the percentage when the student loans are gone. I recently went to the bank to move my money into a medium risk portfolio. It was in a low risk investment before because we were using the money to pay for the down payment on our house. The medium risk is good for me right now, it offers more growth but I am personally slightly risk-adverse so high risk scares me right now! As I get more comfortable investing I may change my mind.
The most important thing I have learned is you don’t have to have it all figured out in order to start. Start by figuring out how much you can save, it should be a priority to “pay yourself first” and then go from there. Next year you’ll wish you had started today.
I hope this has helped inspire you to think about retirement when you are young! Are you already saving? Do you have any advice for people just starting?
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2 responses to “Saving For Retirement”
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I started my RRSP when I got my first job but it was always only in lump sum payments usually around tax time. Now I contribute biweekly with pay periods. I also have a tax free savings account I always thought would be for when I need to make a large purchase like new furniture or something but maybe I will keep it for retirement? It will be nice to not have to pay income tax on it in the future! I hear that tax free savings accounts are a great way to save for retirement.
I love the TSFA! I use it as our emergency fund, but will likely use it in retirement as well.