Contributing to an RRSP: It's a way of life meant to be started young

Vol. 45, no. 1, January-February 2008

According to a recent survey, nearly half of the workers ages 25 to 40 do not have retirement plans and more than a third have no savings. Francine Thivierge, Financial Planner at the Caisse d'économie solidaire Desjardins, believes people should forget the misconception that says you can be too young to plan your retirement.

Facts

• Life expectancy in Canada is 77 for men and 82 for women; the average duration of retirement is estimated at 25 years.
• Investing smaller amounts on a regular basis when you are young provides greater returns than investing larger amounts at a later stage because the compound interest, calculated on capital on which interest has accumulated, works for you over a longer period of time.
• RRSPs can be used to finance the purchase of a first home, to go back to school or to create a financial cushion during a period of unemployment.
• Public pension plans replace only 45% of the income.
• In general, about 70% of the average gross annual income of the last 3 years of work is necessary to maintain a similar lifestyle at retirement.
• There are various types of investments: guaranteed deposits, mutual funds, publicly traded securities, etc.

It is worth seeing an advisor or financial planner who will be able to make the necessary calculations in order to reconcile your present and future needs.

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