Retirement is something that many Canadians begin to consider for the first time as they enter their 40s. With mandatory retirement ages rapidly disappearing and expectations that many of us will need more money to live on in retirement, it’s never too soon to start preparing for the golden years. By investing strategically, you can ensure that you maintain financial security throughout retirement.
The first step in investing for retirement is to make sure you are registered with the Canada Revenue Agency (CRA). All retirement savings are taxable, so you’ll need to keep your taxes in order. You can adjust your federal and provincial tax deductions to account for income earned from RRSPs and other investments. This will also help reduce your tax burden in the following year.
Next, it’s important to save aggressively. For most Canadians, a Registered Retirement Savings Plan (RRSP) offers the best options. Not only do you get a deduction from contributions made to an RRSP, but you can also roll over any unused contributions to the following year. Make sure that your contributions fit within the maximum allowed per year.
Many experts recommend that you invest in a diversified portfolio of stocks, bonds, and mutual funds. Spread your investments across different asset classes, such as cash, stocks, and bonds, to minimize risk. Reducing your exposure to any particular sector will also help you manage market volatility.
Finally, make sure that you invest in yourself. Investing in education, business opportunities and other forms of personal capital will increase your earnings potential, which can be beneficial when you enter retirement.
Retirement is a major life event, so make sure you take the time to plan ahead. By investing strategically in your future, you can ensure that you have enough money to maintain financial security throughout your retirement.