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Finances and the big 4-0: are midlife Canadians planning well for retirement?
-- TD Retirement Savings poll finds one-third of Canadians in their 40s don't have an RRSP --
TORONTO, Jan. 25, 2012 /CNW/ - Mortgage, household bills, kids' tuition - life is costly for Canadian 40-somethings. According to the TD Retirement Savings Poll, one third of Canadians in their 40s (32%) admit they haven't yet opened a registered retirement savings plan (RRSP) even though they realize they should.
"Your 40s can be the toughest decade for your finances, but at this important milestone it is key to reassess your financial plan to ensure you are on track for a comfortable retirement," says Andrea Phillips, Vice President, Retail Savings and Investing, TD Canada Trust.
According to the survey, less than half of Canadians in their 40s (46%) contribute annually to an RRSP, and only 12% say they make the maximum contribution every year. As a result, 38% are concerned they aren't saving enough for retirement.
"For many 40-somethings, it can be hard to find money to start building an RSP when you have a family to support and bills to pay. But the reality is you can't rely on just one asset, like your home, because you'll still need sufficient cash-flow to replace your regular income," says Phillips. "An RRSP is one of the best saving and investment vehicles available today, so you should take advantage of the benefits of tax-deferred and compound growth that an RRSP offers."
The poll found women in their 40s are more likely to say they have not opened an RRSP (36%) versus men in their 40s (29%).
"It's important for Canadians in their 40s to prioritize retirement savings in their peak earning years, so they have enough saved to live the lifestyle they want in retirement ," says Phillips. "If you're having trouble saving, set up a regular pre-authorized transfer of a portion of your income into your RRSP to ensure you have a healthy nest egg for the future."
Phillips offers advice to Canadians in their 40s to ensure they are on track for their retirement planning:
- Speak to a financial advisor and make a plan - At this age, it's not unusual to have experienced an unexpected event that created a detour in your financial plan; perhaps your family got a little bigger or there were unexpected housing costs. Now's the time to get back on track. A financial advisor can help you create a tailored plan and stick to it, even when life throws you a curveball.
- Pay yourself first - It can be hard to put yourself first when you have bills to pay and a family to support, but you're in your peak earning years so it's vital that you pay yourself first and contribute as much as you can to your RRSP now. If money is tight, sit down with your family or a financial advisor to look for ways to compromise on expenses so you have more money to contribute to your retirement savings. Even an extra $100 a month can make a big difference.
- Automate to build wealth faster - It can be daunting to find a chunk of money to contribute to your RRSP before the February 29th deadline. Instead, speak to your bank about setting up a pre-authorized transfer that automatically transfers a set amount at regular intervals throughout the year into your RRSP. In addition to saving without having to think about it, regular contributions help you benefit from compound growth, which can help build your wealth faster.
- Ensure you're comfortable with the level of risk in your portfolio- Diversification and asset allocation remain as important as ever in your retirement investments. Everyone has a different risk profile, though, so speak with your financial advisor about the right mix for you.
About the TD retirement tracker
To encourage Canadians to start thinking about their financial future, TD has developed a retirement tracker - three simple questions to help Canadians determine if their retirement plan is on track at www.tdretire.com. The retirement tracker encourages Canadians to answer three simple questions about their personal finances to get an idea of where they are in their retirement planning. It weighs factors like the number of years until retirement, value of current savings and the amount of regular contributions and quickly determines whether Canadians are "Getting Started", "On Their Way" or "On Track."
About the TD Retirement Savings Poll
TD Bank Group commissioned Environics Research Group to conduct a custom, online survey of 1,006 Canadians aged 25-64 who are not retired. Results were collected between November 22 and December 2, 2011.
About TD Canada Trust
TD Canada Trust offers personal and business banking to more than 11.5 million customers. We provide a wide range of products and services from chequing and savings accounts, to credit cards, mortgages and business banking, to credit protection and travel medical insurance, as well as advice on managing everyday finances. TD Canada Trust makes banking comfortable with award-winning service and convenience through 24/7 mobile, internet, telephone and ATM banking, as well as in over 1,100 branches, with convenient hours to serve customers better. For more information, please visit: www.tdcanadatrust.com. TD Canada Trust is the Canadian retail bank of TD Bank Group, the sixth largest bank in North America.
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