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First-timer’s guide to retirement

first-timer’s guide to



Time has a way of passing a lot faster than you think, especially the older you get. Planning and saving for your retirement is the ultimate long game. A little bit of strategy now can lead to a more winning future.

Back to basics


Picture this: After getting up and going to work every day for most of your life, there comes a day where you get up and can do whatever you want—and that day is not a Saturday, Sunday, holiday, or vacation day. Retirement is a time to enjoy the efforts of your hard work and focus a little bit more on you, while leaving the workforce behind. Your passions, hobbies, family, friends, or whatever else it is you’d like to do with your time, become the focus of your days rather than your job. But only if you make, and stick to, a solid plan to get there.

How much you need to retire depends on your current income, lifestyle, and expenses. The general advice is that you should aim to replace 70% to 90% of your annual pre-retirement income through savings for retirement. For example, say you earn an average of $63,000 per year before retirement. That means you should try to budget for $44,000 to $57,000 per year in retirement. If you’re curious how much you should aim for, check out our Retirement Savings Calculator

How do you save for retirement?


Like most things in life, there’s no one set way to save for your retirement. It’s more about understanding what your options are and picking the right combination or approach for you. And when it comes to financing your retirement, there are basically three sources of income that you can draw from: government benefits, workplace or employer benefits, and personal savings. Knowledge is power—understanding your options will mean a more secure future.

Government benefits

In Canada, there are two primary sources of government benefits designed to help support those who are of retirement age.

The Canada Pension Plan
The Canada Pension Plan (CPP) is a monthly, taxable benefit that you are eligible to receive when you retire. The amount you receive each month is based on a combination of your average earnings throughout your working life, your contributions to the CPP, and the age you decide to start your CPP retirement pension. How much you contribute to the CPP is based on your earnings and there is a cap on how much you can contribute each year.

CPP payments are not automatic—you need to apply to receive them. To be eligible, you must be at least 60 years old and have made at least one valid contribution to the CPP over the course of your working life. For higher earners, or for those who have more expenses, CPP alone might not be enough to sustain your lifestyle once you retire. It’s important to understand the full picture and to crunch the numbers so you know what can work for you.

Old Age Security
The Old Age Security (OAS) pension, by comparison, is a taxable monthly payment you can receive once you’re 65 and older. Depending on where you live, you might not even need to apply to receive it—Service Canada will automatically begin payments. How much you’re eligible to receive each month depends on how long you’ve lived in Canada (or certain other countries) after the age of 18. For those who are in a lower income bracket, you might also qualify for additional funds under the Guaranteed Income Supplement which is available to low-income recipients of the Old Age Security pension. Once you reach retirement age, it’s a good idea to check out federal government programs you may qualify for.

Workplace benefits

Your employer might offer programs or incentives to enhance your retirement income via a group RRSP or a workplace pension. Every organization is different, so it’s important to speak with your manager, HR department, or to review your onboarding materials closely to understand what may be available for you to take advantage of. When it comes to retirement savings, every little bit really does add up over time to make sure you’re taking advantage of programs that might be offered.

Personal savings

Registered savings are one of the main ways to build your personal savings throughout your adult life. By definition, these savings options are a savings plan that is registered with the Canada Revenue Agency (CRA) designed to help build money for retirement. The two main types of registered savings are RRSPs and TFSAs. If those don’t mean anything to you, take a step back and read our first-timer’s guide to RRSPs and our first-timer’s guide to TFSAs.

Why should you start saving now?

When you’re first starting out in your career, thinking about a work-free future might seem next to impossible to imagine. Not only that, it might feel next to impossible to pay for, too. Between paying back student loans, saving for a down payment on a house, purchasing a vehicle, and the general cost of living, it might not seem like you have a whole lot left at the end of the day to dedicate to your future self.

Here’s the thing—your income will grow over time, but so will your expenses. That’s where the idea of every little bit counts starts to come into play. Maybe you can only save $20/week in your first few years of your career. Over time, as you begin to grow and progress and make more money, you’ll be able to contribute more to your savings, too. And eventually you’ll see that your money will do some of the work for you. Compound interest—the interest you make on your interest—adds up over time and it will become your best friend as you save for your retirement and other long-term projects.

How do you start saving now?

How much you’re able to put aside each month toward retirement savings depends entirely on your budget. There is no set amount or magic number you “should” save each month. That being said, a common amount to aim to save is between 5–10% of your monthly earnings.

One of the easiest ways to do this is to set up regular preauthorized payments from your primary bank account to your retirement savings account. Like any good habit, the earlier you get into it, the more likely you are to stick with it. Saving for retirement really is about the long game. So, the earlier you’re able to make your money work harder for you, the better the outcome once you’re ready to put your feet up.

So where do you go from here?

Like anything, knowledge is power. Learning about retirement savings might feel like a bit of snooze fest now, but there’s nothing sleepy about being empowered to take on your future. Your money can work harder for you. Contact us to learn how.

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