retirement planning

The so-called RRSP Season is on its way. TV, newspapers and magazines will soon be full of advertising to get you to make your last-minute RRSP deposits. And then RRSPs and retirement planning are often forgotten until the next deadline. But a little advance planning will get you more from your RRSP.

Start early. It's human nature to put things off. As there is no immediate consequence to delaying financial planning, unlike not paying your electricity bill, it's easy to just let RRSP deposits slide. But to get the most from an RRSP, start it as soon as you can. A 25-year old depositing $5,000 per year at 8% compounded annually will have $1,199,706 at age 65. A 35-year old will have about half that, and a 45-year old investing the same amount at the same rate will have less than a fifth. So begin your RRSP as soon as you can.

In the aftermath of the US housing market bust and the ensuing financial meltdown that led to global stock market declines of 2008, people are getting back to the basics as far as their retirement planning goes. Although the stock market has recovered, many pre-retirees have lost a lot of ground in their retirement accounts and are facing a new reality. Retirement may not be what they had originally envisioned; but with some retirement income 101 basics, most people should be able to get back on track.