It's usually not too late to start saving for retirement. And if you are determined, and dedicated to providing a nest egg for yourself, you can make it happen.
If you are at your peak earning years and, if you believe your marginal tax rate will be lower at retirement, you should consider maxing out your RRSP contributions or using as much as you can. This will shelter your current earned income and defer your income tax payable until you are at a lower marginal tax rate in retirement.
You may have RRSP contribution room carried forward from previous years and there are ways to catch-up your RRSP contributions to grow your retirement funds. If you have had earned income over the past number of years and have not contributed to an RRSP, you most likely have a large balance of unused RRSP deduction room (check your Revenue Canada Notice of Assessment). To fast track your retirement savings, in this instance, you may want to catch up by taking a Take 10 RRSP Loan. This will bring you up-to-date with your RRSP contributions and provide for a sizeable tax refund that could be used to further top up your investment portfolio and pay down your loan.
Your next option would be to contribute (up to $6,000 per year or more if you have carryover room) to a Tax-Free Savings Account (TFSA). A TFSA is an excellent way to invest and earn tax-free investment income. A TFSA is flexible and can have a variety of investments under it, such as variable interest savings accounts, term deposits, guaranteed investment certificates, mutual funds* and publicly traded securities* and bonds.* Using a combination of RRSPs and TFSAs, and non-registered investments to help fund larger purchases, could give you the ultimate in flexibility, now and into retirement.
So as you can see, there are ways to get your retirement savings growing. It is important and something most of us do not fully take into consideration is how long we may need to fund our retirement dreams ... possibly 20 to 25 years if you retire at age 65. Having an investment portfolio that is comprehensive, provides growth opportunities and is flexible, is very important.
Overall, the best way to get a proper solution for you is to have a financial expert provide you with customized advice based on your individual situation. This service is available to members of Synergy Credit Union. Just give us a call, set up an appointment and we'd be pleased to assist you.
*Mutual funds are offered through Credential Asset Management Inc. Mutual funds and other securities are offered through Credential Securities, a division of Credential Qtrade Securities Inc. Credential Securities is a registered mark owned by Aviso Wealth Inc. Using borrowed money to finance the purchase of securities involves greater risk than purchasing using cash resources only. If you borrow money to purchase securities, your responsibility to repay the loan and pay interest as required by its terms remains the same even if the value of the securities purchased declines.