Everyone’s different, so there’s no single rule to tell you how much money you'll need for your retirement. But the rule of thumb is, the sooner you start saving, the more money you’ll have.
Here’s our checklist of what you could be doing now, depending on your age.
Often, your 20s is the decade of financial freedom. It’s when you start your career and start earning – and spending – money.
Retirement may seem a long way off but there are some things you could be doing now to get an early start:
Make sure you’re signed up to your workplace pension scheme and make the most of any matching contributions your employer pays into it. It’s like getting free money.
Work out your monthly budget[@retirementplannerdisclaimer] so you know how much money you can save and how much you need to live off.
Even if you can only afford a small amount it starts to add up, especially as you’ll earn interest on previous interest.
We offer plenty of savings options. Our Registered Retirement Savings Plan (RRSP), for example, is a government-recognised tax-sheltered account. This means any money you pay into it is taken off your taxable income. And, you only pay tax when you withdraw funds, which could be when you’ve retired and in a lower tax bracket.[@tax-advice2]
Advice for your 20s: save what you can no matter how small
If you haven’t started yet, your 30s is the time to do it. But if you have, you could think about increasing your contribution in line with any salary increase.
But keep an eye on your outflows – such as rent, household bills and travel – and save what you can afford. Other things to do are:
In addition to your RRSP, consider a Tax-Free Savings Account (TFSA). While investments in a TFSA don't reduce your taxable income like RRSP contributions do, the income you earn is not taxed[@tfsa-tax] so your savings can grow faster. Contribution limits may change each year, and you can carry over unused portions from previous years, so it could be an ideal way to put away additional funds for the future, that you can usually take out any time without penalty if the need arises.
If you’re having children, start saving for their post-secondary education with a Registered Education Savings (RESP) account. Money you invest in a RESP grows without being taxed until it's withdrawn by your child, and their tax rate may be lower than yours at that time. Government grants are also available to help boost your savings.
Take an active interest in your finances through our range of online money management and retirement tools, like the Retirement Planner.[@retirementplannerdisclaimer]
Advice for your 30s: increase your contributions if you can
If things are going well in your 40s you may be at the peak of your earning potential. Or, things may not have gone to plan and you’ve yet to start saving for your retirement. Don’t worry, there’s still time and we’ve plenty of tips to help.
Either way, it’s time for a review and there are some things you could do:
Ask yourself a few questions to make sure you’re going in the right direction. What am I saving for? How much longer should I save? Am I willing to take a little risk for the potential of a bigger return?
If you have a Registered Retirement Savings Plan (RRSP) but you’ve not invested as much as you’d hoped, then you could apply for an RRSP Loan[@rrsp-loan] to help you reach your maximum investment limit. Also, top up any available contribution room in your TFSA[@tax-advice2].
Use our Registered Retirement Investment Fund (RRIF) calculators[@retirementplannerdisclaimer] to work out how much you need to save to live out your retirement dreams.
Find out how much your Canada Pension Plan (CPP) is. The monthly amount you’ll receive depends on:
Investing could be a great way to add to your retirement pot, but it can be confusing if you’re not sure where to start. We’ve made it easy with HSBC Wealth CompassTM [@hficdisclaimer], a personalised investment recommendation service. Bear in mind, the value of investments can fall as well as rise, and you may not get back what you put in.
If you haven't started already, you may want to put some money aside for a lifelong dream or, if you have a family, for your children’s future.
Advice for your 40s: think smart to boost your savings plan
In your 50s, retirement is getting closer. You should be making sure you’re fully focused on your savings and investment plans, and are ready for any possible changes in your life.
Here’s what you could do to protect the money you’ve already saved:
Use our retirement planner[@retirementplannerdisclaimer] to give you an indication of whether your retirement funds are on track.
Our integrated approach to goal planning can also help set you on course to reaching your retirement goals, so you can plan for the future you’ve always dreamed of. Goal planning is an exclusive service we offer to our HSBC Premier[@premierwealth] clients. Your HSBC Premier Relationship Manager will help you take a holistic view of your financial needs and develop a customized goal plan unique to your situation.
If you have a spouse whose income will be lower than yours during retirement you could pay extra into their RRSP. The payments you make are still tax deductible, the RRSP grows tax-free and your spouse can withdraw the funds in retirement at their lower tax rate, and when their income is typically lower.
Having all your savings, investments and pension plans in one place makes it easier to keep track of them all, can potentially reduce fees and helps to avoid overlap in your portfolio.
Note that you may be subject to transfer or withdrawal fees and you should consult a tax advisor about transfer rules.
Advice for your 50s: stay focused
Your 60s can be your greatest adventure, where you reap the benefits of a well thought out retirement plan.
But to make sure you can put your goals into action you could:
Just like your 20s, write down your total outflows, from everyday household bills to more desirable expenses, eg holidays and hobbies.
‘Semi-retirement’ has many benefits. It can keep you physically, mentally and socially active and help bring in some extra money.
Think about what you’d really like to do when you retire, eg spend more time with the family, learn a new skill or go travelling. Whatever it is, start planning and looking forward to the fun stuff, you’ve earned it.
If you have grandchildren, you could also give their education savings a boost by opening or contributing to a RESP for them. Make sure to coordinate with their parents to maximize government grants each year without over contributing.[@retirementplannerdisclaimer]
Advice for your 60s: start living!
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