Saving For Retirement- Aim To Start Early!

Updated July 17, 2019 by Daniel Toma

It is never too early to start putting aside money for retirement. Many younger individuals are simply not saving - bypassing the process in order to plow as much money as possible into a mortgage down payment or discretionary spending. I would like to illustrate the importance of an early retirement saving strategy by using an example.

Brian is currently 25. Let us assume that he will retire at 65, live until 85 and wants to maintain a modest retirement income of $35,000. We will also assume that he gets $13,332 CPP/OAS income in retirement and earns a 6% rate of return on his investments. Plugging this information into the TD Retirement Savings Calculator his minimum required monthly RSP contribution is $180/month. (Please note: I suspect that the above calculation is in today's dollars, not inflation adjusted).

Now let us assume that Brian puts off saving until he is 35. Changing that one figure in the calculator now requires that he save $302/month. While he is likely earning more at this point in his life, there is certainly a larger investment commitment required. If we assume that Brian starts saving even later, when he is 45, the result is $564/month, more than three times the original amount.

As you can see, the importance of starting to save early for retirement is important, primarily due to the power of compound investment growth. Many financial institutions can arrange automatic investment withdrawals to facilitate meeting your retirement goals.

To further discuss your retirement savings please contact me, I am always eager to assist with responsible saving!


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The above information has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act upon the information contained therein without obtaining specific professional advice.

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