Many of us have lofty goals for retirement. We want to live in comfort, but to do that, it's important to build up a nest egg. Reaching your retirement goals requires planning and persistence. If you want a better chance of reaching your goals for retirement, here are five tips to consider:
1. Start as Soon as Possible
The most important thing is to start saving for retirement as soon as possible. It doesn't matter if you think you are too young, or if you think you don't have enough money to begin. It's often possible to start investing for retirement with as little as $50 a month. The earlier you start investing for retirement, the longer your money has to benefit from the effects of compound interest. Start now, and your chances of meeting your goals will be improved.
2. Use as Much of Your RRSP Contribution Room as Possible
One of the ways to save for retirement is to use your RRSP. There are tax advantages associated with contributing to your RRSP, and this provides you with an opportunity to make the most of your money. While you might not be able to use your contribution room at first, it carries over, and you can add more as you become better able. Contribute as much as you can to your RRSP so that more of your money grows with greater tax efficiency.
3. Make it Automatic
Sometimes, remembering to contribute the money to your retirement portfolio is difficult. Instead of relying on your own memory, make your contributions automatic. Doing it automatically can help you ensure that a contribution is made each month. On top of that, your automatic contribution can be set in your budget. That way, the money comes out first, and you don't have a chance to spend it. Make it a regular part of your budget, and you won't be so tempted to skip your contribution each month.
4. Rebalance Your Portfolio
It's important to double check your portfolio regularly. Consider your goals and your needs. That way, you can figure out which assets in your portfolio are most likely to help you reach your retirement goals. However, it's important to periodically review your portfolio so that you know whether or not its composition is continuing to help you toward your retirement goals. While you don't want to always be changing your asset allocation (it can be very efficient), you do need to occasionally rebalance your portfolio, though, to make sure that you are track.
5. Increase Your Contributions
Even after you run out of RRSP contribution room for the year, it's still a good idea to continue working to shore up your retirement. As you earn more money, it's a good idea to increase your retirement contributions. And, when you run out of room in your RRSP, you can employ other tactics. The TFSA makes a good place for retirement savings, and you can also use extra income you have to establish alternative income sources. If you make an effort to start a business, or use income investments over time, you'll have more revenue sources later on, in retirement.