Episode #9 - Two Minutes to a Better RSP: How Much is Enough?
Announcer: Welcome to The Money Clip podcast series from The Vault, Scotiabank’s online guide to helping Canadians get ahead financially. Listen in to gain a deeper understanding of your personal finances and find out how a few small changes to the way you manage your money can make a big difference.Michael Seaton: Thank you for joining us on The Money Clip podcast series from Scotiabank. I’m your host, Michael Seaton, and with The Money Clip we provide Canadians with a deeper understanding of personal finance and money-related matters. This is our series titled “Two Minutes to a Better RSP”. We hope to put you on the path to understand how to maximize your retirement savings plan as the deadline approaches. This is our third episode in the RSP series, and our subject today is saving for your retirement. Everyone has questions around RSP season. The most common one is, “How much do I need to save for my retirement?” The answer is unique to you and to your situation, and it will depend on what you need to retire and what kind of retirement lifestyle you envision for yourself. For instance, if retiring at age 55 and planning to travel extensively, you’ll need more retirement savings than someone who wants to continue working past the traditional retirement age and live a more modest lifestyle. So, one of the first things you need to do is spend some time thinking about the kind of lifestyle for later on in life you want. Then it’s a good idea to do some projections. There are a number of online financial calculators that can help you determine where you stand today and what you’ll need to save for the life you want to lead tomorrow. These online tools will factor in your RSP, your company pension plan, Canada Pension Plan and other possible sources of retirement income. Expert advice from your financial advisor can also help walk you through the online tools and other elements that will help to better determine what you may need for a comfortable retirement. Now don’t forget that when we’re younger, our cash flow going out is typically higher than it is later on in life. So keep today’s expenses in mind and determine if they will be the same in your future. After you’ve crunched the numbers, do what you can to boost your savings. Canadians are living longer and spending more time in retirement than ever before. So the more money you can sock away today in your RSP, the better off you’ll be down the road. Make it a point of contributing any raises, bonuses, tax refunds and other financial windfalls to your RSP. Another good strategy is to take a closer look at your discretionary spending and then eliminate daily expenditures that don’t add a lot of value to your life. These are things that could easily be eliminated to help you find more money and save as part of a regular contribution plan. Remember that with the power of compound interest over time, every little bit counts. Even small amounts can make a real difference in the long run. And never forget that a comfortable retirement is a long-term goal and a commitment to your future. So start saving as soon as you can, and you’ll have time on your side.
This has been another Two Minutes to a Better RSP podcast. Keep listening for more in this series as we take two minutes to review tips and suggestions to reach your retirement goals. Thanks for listening.
Announcer: Do you have any thoughts on today’s show? We’d love for you to get involved and become part of the conversation. Send us your questions, comments or money management tips so that we can address them in future podcasts. Our email address is themoneyclip@scotiabank.com and our call-in number is 1-866-652-5333. The Money Clip is brought to you by The Vault at Scotiabank. Be sure to tune in again next time.