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If I had a million dollars… It's within reach for savers who start early!
TD Canada Trust survey reveals young Canadians do not realize it is possible to retire a millionaire - if they start saving today
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TORONTO, Feb. 16 /CNW/ - Would you like to retire a millionaire? It might be more achievable than you realize.
Despite having time on their side, three-quarters of young Canadians say it's unlikely they will retire with a million dollars in the bank. In fact, according to the TD Canada Trust Millionaire's survey, which polled Canadians aged 18-34, one-third say their best shot at joining the millionaire's club is to win the lottery, compared to only one-in-ten who said they could retire with one million by putting aside money each payday.
"The reality is that for Canadians who are several decades away from retirement, with good discipline, the right financial plan, and smart investments, heading into retirement as a millionaire is an attainable goal," says Carrie Russell, Senior Vice President, TD Canada Trust. "The idea of retiring a millionaire sounds daunting to most, but there are steps you can take to reach that goal — with no lottery tickets required!"
The million dollar question: How much should I be saving and investing each month?
Just in time for the March 1st RRSP contribution deadline, TD Canada
Trust offers the following guidelines to get young Canadians on the
road to retiring a millionaire - starting with $100 per month at the
age of 25, and increasing the monthly amount as they age and earn more
|Age||Savings per month|
|25 to 30||$100|
|30 to 35||$250|
|35 to 40||$500|
|40 to 50||$750|
|50 to 65||$1,000|
This chart assumes contributions are directed into an RRSP account, benefiting from the tax deferred growth and earning a 6.8% rate of return per year, compounded monthly.
The TD Canada Trust Millionaire's survey found that young Canadians over-estimate the amount they need to put away each month to join the millionaire's club in retirement. Sixteen per cent of those aged 18-34 think they need to be putting away $1,000-$2,000 per month and another 16% think it's more than $2,000 per month. A further 22% do not believe it is at all possible to accumulate one million dollars by putting away money with each paycheque.
Time (and compound interest) are on your side
"If you do the math, you quickly realize that retiring with a million dollars is achievable for a significant number of young people with a steady and growing income, who have the advantage of time and compound interest on their side," says Russell. "If you are in your twenties, start today by putting away $100 a month into your RRSP and then plan to increase that amount as your earnings increase. If you invest your RRSP savings wisely, you may be on your way to enjoying a comfortable retirement. Even if your retirement goal is not a million dollars, it just goes to show what you can achieve if you put your mind to it."
The key to success, Russell advises, is to start early and save often. Compound interest can be a powerful boost to your nest egg, so it is important to maximize your time to earn interest. For example, investing $10,000 and receiving a modest 6% annual rate of return can result in a total of close to $18,000 after 10 years, $32,000 after 20 years, and $57,000 after 30 years.
"Start now. Save monthly. Increase your regular RRSP contributions as your salary increases," advises Russell. "While there is no reliable quick win for getting rich, these three steps can help get you on your way to retiring comfortably… and maybe even a millionaire."
About the TD Canada Trust Millionaire's Poll
From February 4 to 5, 2011, Angus Reid Public Opinion conducted an online survey among 689 randomly selected Canadian adults aged 18-34 who are Angus Reid Forum panelists. The results have been statistically weighted according to the most current education, age, gender and region census data to ensure a sample representative of the 18-34 adult population of Canada.
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 - most open 8 'til late and many now open Sunday. 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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