Money Management Newsletter: RSP
Unfortunately, too many people are counting on the solutions of yesterday to address the retirement needs of tomorrow.
Consider employee pension plans. How many people these days work for the same employer for 45 years straight? Not many. The threat of companies going bankrupt and leaving unfunded pension liabilities or even attempting to collapse their pension plans is an ongoing problem. Your company pension plan may not be as secure as you think. Many companies are switching from defined benefit pension plans where they assume the risk of funding a guaranteed pension amount, to defined contribution plans where the employee takes the investment risk.
Your home equity may not be the answer either, if you wish to continue living there and do not want the erosion of estate value that a reverse mortgage would create.
The Canada Pension Plan and Old Age Security are not intended to meet retirees full income needs, although spouses who each receive the maximum C.P.P. and O.A.S. may get by if they have modest retirement expenses. Problems can occur however if one spouse dies, as the reduced total pension for the survivor may not meet all income needs.
As sure as night follows day, smart Canadians are heading toward comfortable retirements by supplementing their private and government pension expectations with both registered and non-registered investments.
How much do you need to save to attain your retirement
goals? The short answer is,
as much as possible. Investment advisors
can take you through the calculations once you provide the necessary details.
You should start earmarking a manageable percentage
of your own income, right now, to go directly into your RRSP. It is a
good idea to aim to "pay yourself" 10-15 percent of your income,
right off the top. Most financial institutions will let you make monthly
or more frequent contributions into an investment or RRSP plan by a direct
withdrawal from your bank account. You won't spend what you don't see!
You'll reap the benefits in your old age.
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, Fiscal Agents Money Management Newsletter