Retirement is a major financial milestone that requires careful consideration and preparation, and Canadians are increasingly concerned about their financial security during retirement.
In this blog post, we explore how much the average Canadian has saved for retirement and provide essential retirement planning tips to help Canadians secure their financial future.
How Much Does the Average Canadian Have Saved for Retirement?
The average Canadian nearing retirement has saved around $272,000, which averages to a household income of $514,000.
This figure only includes cash savings and not any other types of assets. While this amount might seem significant, it may not be enough to maintain a comfortable lifestyle throughout retirement, which could span several decades.
With this figure in mind, let’s look at some retirement planning tips to help you save more and retire in a financially comfortable position.
Retirement Planning Tips for Canadians
Considering the importance of saving for retirement and the current average amount of retirement savings, here are some essential tips to help you enhance your retirement planning:
Start Early
The power of compounding interest cannot be overstated. The earlier you start saving for your retirement, the more time your investments have to grow. Start contributing to your retirement accounts as soon as you enter the workforce, even if you can only afford to contribute a small amount at the beginning. Gradually increase your contribution as your income grows.
Take Advantage of Employer Benefits & Tax-Advantaged Accounts
If your employer offers a pension plan or a group retirement savings plan, such as an RRSP or a Tax-Free Savings Account (TFSA), take full advantage of this benefit.3 Employer-matching contributions are essentially free money and can significantly boost your retirement savings.
Diversify Your Investments
Diversifying your investment portfolio helps reduce risk and increases the potential for higher returns. Consult a financial advisor to create a balanced investment strategy that aligns with your risk tolerance and retirement goals.
Contribute Regularly
Consistency is key to successful retirement planning. Set up automatic contributions to your retirement accounts to ensure you save consistently and remove the temptation to spend the money elsewhere.
Prioritize Debt Repayment
High-interest debts, such as credit card debt, can significantly drain your financial resources. Focus on paying off high-interest debts first before allocating more funds to your retirement savings.
Have a Retirement Plan
Create a comprehensive retirement plan that outlines your financial goals, estimated expenses during retirement, and the steps you need to take to achieve those goals. Reevaluate and adjust your plan regularly as your circumstances change.
Retirement planning is a crucial aspect of every Canadian’s financial journey. While the statistics on average retirement savings might not be overly encouraging, taking proactive steps can significantly improve your financial situation during retirement. By starting early, leveraging employer benefits, diversifying your investments, and adhering to a well-defined retirement plan, you can secure a comfortable and worry-free retirement.