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 tax deduction benefits for your contributions. Even with all those benefits it’s sad to say that sometimes the priority of saving in your RRSP gets left behind.
Nowadays people have more immediate goals they want to reach and therefore 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 make 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 of a financial impact it will have on your current budget. Why? Because the longer timeframe you have to save the less money you need to contribute on a monthly basis.
You can see with this retirement calculator that saving $100 per month from the age of 25 until 65 the amount adds up to $72,964. If you started saving at 40 years old with the same monthly contribution the total adds up to a much lower amount at $37,669. Save yourself some money and start saving sooner.
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 multiple goals at one 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 don’t need to save as much 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 savings priorities contact me 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.
For more tips or to ask questions, please contact your Cornwall Wealth Management Advisor.
This post originally appeared on Mark Mulholland’s blog