Retirement and Wealth
Retirement planning and Wealth Management in Canada is a comprehensive process that involves setting retirement income goals and then creating a detailed plan to achieve those goals. It's not something you do overnight, but rather it takes significant effort and time.
You need to answer important questions like how much money you need to retire and at what age you plan to retire. The best retirement plans take years to curate, implement, and deliver the desired results when you finally retire. When you start saving and investing and what you invest in can make a significant difference in how much retirement income you have access to.
Whether you decide to retire early at 40 or 55 or wait until the traditional 65 years, the ever-increasing lifespan of Canadians and declining workplace pension plans mean you may need a lot more money in your retirement nest egg than you think.
The sources of retirement income in Canada include registered savings plans, government and workplace pension plans, and personal investment accounts. For an in-depth review of the three pillars of retirement income, you can read a retirement planning guide.
The Registered Retirement Savings Plan (RRSP) was designed by the Canadian government to hold your retirement savings. The money you contribute to the account during your working years continues to grow tax-free until you retire and start making withdrawals. The amount you can contribute each year depends on your income for the previous year and unused contributions that have been carried forward from previous years.
One good thing about an RRSP is that your contributions can be deducted from your taxable income, thus lowering the taxes you pay when you file your tax return¹. You can hold various investments in your RRSP, including cash (savings account), stocks, GICs, mutual funds, Exchange-Traded Funds (ETFs), bonds, and even some precious metals.
If you hold a portion of your RRSP funds in a savings account, you should ensure you get the best savings rates possible. Millennials and those with a longer time frame before they need to access their RRSP can benefit from taking on some investment risk. You can hold stocks or ETFs and, over time, potentially earn higher returns compared to a savings account.
