We’ve got some bad news. Someday, if you’re lucky, you’re going to be old. The good news is, by then, you probably won’t have to work, so even though your knees may hurt a little, you’ll be able to see movies cheaper and sleep in every day of the week! Monthly payments from the Canada Pension Plan and Old Age Security alone will not provide you this senior Shangri-La. The only way you’re going to have enough saved up for your retirement is if you start saving for your retirement early, which means you really have to start now, and it doesn’t matter if you’re 20, 30, or even 50. It’s truly never too late to start.
So how are you going to financially plan for your retirement? The CRA provides major tax breaks through various accounts for those in the mood to save. Those who work full time should absolutely take full advantage of GRSPs, or Group Retirement Savings Plans, a company administered retirement savings plan — the irresistible advantages being that any money you contribute is tax deferred, meaning you won’t pay any taxes on the income until you spend it in retirement. Plus, most companies kick in between 3 and 5% of your salary. RRSPs, or Registered Retirement Savings Plans, are similar to GRSPs except that you administer them yourself, giving you total freedom to invest the retirement savings as you wish.
While GRSPs and RRSPs are designed to save until you reach retirement age, RRIFs, or Registered Retirement Income Fund, are the accounts that you will be drawing your retirement income from. By the end of your 71st year, you’ll be required to convert your RRSP or GRSP into either an RRIF or an annuity. If you start saving now, by that time you should have the funds to party your septuagenarian pants off.