To help you save without frowning too much, here are 5 tips to make saving easier.
Start saving early
- You are probably thinking that this tip is not original, but that is the real truth. Putting $20 aside every week as soon as you turn 25 will help you greatly make your life easier at age 45. Your $20 will not be enough to cover your needs throughout retirement, but it is a start, and you will always be able to increase your weekly savings as soon as you can. Remember: saving early pays off thanks to compound interest. In other words, if you start saving sooner than later, you will have to put less money aside. You can not only count on the interest that your investments generate, but also on interest generated by that interest. Isn't that interesting?
Make automatic payments each week and not only once a year
- Every time you are able to put money aside, you can be proud of doing so and see your investments grow. It is easier to put $20 a week in an
RRSP than withdraw $1000 from your bank account in February. If necessary, during the most difficult periods, reduce the amount of your payments, but do not stop them.
Invest your tax refund and other unexpected income
- You were not expecting to receive such a high tax refund? Rejoice, and invest it all or in part. Savings can be seen in two different ways: like a restriction or like a way to spoil yourself in the future. You deserve the retirement you have been dreaming of, so start achieving your ambitions right away.
Think about postponing your retirement or be strategic as for the time chosen to start receiving your
QPP
- Postponing your retirement increases the amount of your retirement pension under the Québec Pension Plan and gives you more time to accumulate savings. It is often at the end of your career that you have higher income. Therefore, it is during that period that you have more money to save.
If that option is not possible for you, you could however make a strategic choice to apply for your retirement pension under the
QPP at age 65 to obtain 100% of the amounts to which you are entitled and therefore put all the odds in your favour to have a more comfortable retirement. You could also wait until you reach age 72and receive 58.8% more each year. When you stop working, you could use other sources of income that you had planned.
Think about phased retirement
- Phased retirement, more and more adopted by retirees, will likely be more popular with future generations, if we rely on the the evolution of the labour market. A phased retirement is advantageous regarding savings. During the transition period, you combine your employment earnings with your available retirement income while remaining in action, but at a pace that suits you. Bonus points: not only do you have an additional income that allows you to dip into your savings, but you can continue to contribute to the Québec Pension Plan, which increases the amount of the pension you will be receiving for life.
There is no miracle recipe to save. Sometimes, small or big sacrifices have to be made. If you are not able to put money aside by yourself, consult a financial planner, who will help you develop a savings strategy for your retirement, according to your goals and personal financial situation.
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