Getting started — or getting serious — about saving for your retirement? Here’s a step-by-step guide to setting yourself up for financial success.
Step 1: Open an RSP account
With a tax deduction for every dollar you contribute and tax-deferred growth, saving inside a registered Retirement Savings Plan (RSP) can be the smartest way to save for your retirement. Visit your TD Canada Trust branch TD Canada Trust branch today to open an
Step 2: Make your money work hard
Try to avoid “parking” your money in a lower-interest savings vehicle and then forgetting to move it. The difference between a 3% return and a 6% return on $5,000 invested for 25 years is nearly $11,000. TD Canada Trust has a range of investment options, including GICs and Mutual Funds, so you can select an investment based on your time horizon and risk tolerance.
Step 3: Invest regularly
It’s easier to save if you put smaller amounts aside on a regular basis. Once you’ve opened an RSP, consider starting an automatic investment plan, where money is taken from your bank account and automatically invested at regular intervals. Your TD Canada Trust advisor can set up the Pre-Authorized Transfer Service for you. Use the RSP Contribution Calculator to find out how much you should be saving to reach your retirement savings goal.
Step 4: Stay invested
Historically, financial markets have generally increased over the long term. Focusing on the long term will help you stick to a disciplined strategy throughout short-term market volatility.
Step 5: Maximize your contribution
The beauty of RSPs is that unused contribution room is carried forward. Try to make the maximum contribution each year, and then try to use previous years’ contribution room. Investing any income tax refund that’s generated will help. An RSP loan, which offers a low interest rate, can be a good strategy for many people. In most cases, the long-term benefits of contributing to your RSP will outweigh the short-term cost of the loan. Read more about how RSP loans can help, or talk to a TD Canada Trust advisor to see if an RSP loan could be a smart choice for you.
Step 6: Open a TFSA
You probably already know that a Tax-Free Savings Account (TFSA) is a great way to save for shorter-term goals. But the TFSA also offers many benefits as a retirement savings tool. When the tax-free returns are compounded over a longer period, they generate increased savings. A TFSA can provide you with funds in the years before you can draw on other sources of retirement income. And drawing on TFSA funds during retirement doesn’t affect your eligibility for income-tested government benefits (like Old Age Security) and tax credits. Depositing the maximum amount each year into a TFSA for both you and your spouse is a smart way to supplement your RSP savings. Open a TFSA today.