When should I ACTUALLY start saving for retirement?

Whether it’s sunny beaches, cruising the open road, traveling the globe or just relaxing and taking time to enjoy your life – retirement looks different for everyone. No matter what it may look like for you, the one thing we all have in common is that one day we’d like to retire and we need money to make it happen. Whether you’re just starting your career, counting down the days, or somewhere in the middle, there are things you can do to ensure your retirement is exactly what you want it to be.


“What do you mean retirement? I just started working!” That may be true, but ideally, you’ll want to start saving for retirement as early as possible. We know that’s not always possible, so wherever you are in life’s journey, the best time to start saving for retirement is RIGHT NOW!!!

Here are some tips for you, wherever you are on your retirement journey:

Start early and contribute often

The earlier you start saving, the more interest you will earn and the more money you will have when you’re ready to retire. For example:

Age 20 years old 40 years old
Monthly investment $200 $800
Interest rate 6.5% 6.5%
Retirement age 65 65
Total invested $108K $240K
Interest earned $522K $362K
Total retirement savings $630,000 $602,000

Although both people ended up with a similar amount, the person who began saving at 20 years old, put in less than half of their own money – it mostly came from interest (i.e not your pocket).

Make it automatic

The easiest way to reach a savings goal is to set up automatic transfers to your retirement accounts. That way, it is coming out at a consistent rate and you don’t have to bid an emotional farewell to your money every month as it will be automatically transferred or deducted from your pay cheque.

Don’t touch your retirement fund. View it as money that is not at all accessible

There are lots of different types of accounts you can use to save for retirement, but the best ones are those you can’t touch. For example, there are TFSAs and RRSPs, and other special savings account you can use to meet your different retirement savings goals. The best thing to do if you’re not sure what accounts work best for you is to talk to a Financial Advisor. You can also check out our investment terminology blog to find out more information about different options and what those acronyms mean. By locking in these inaccessible accounts, it removes the temptation to pull from these savings accounts when you just NEED that new pair of shoes and sets you up for success when you retire.

Get rid of debt before retirement

Simply put, you don’t want to owe money when you are no longer making money.

Annually review your retirement plan to see how you’re doing and if it will still meet your needs

Just like a doctor’s check-up, a financial check-up is important to do every year. Work with  your financial advisor to make sure you’re on track and make any changes to your plan as you need. A great tool you can use to see how much you may need to be set up for retirement is our Retirement Planner Calculator.

Make sure you understand at tax time what your RRSP and TFSA contribution limits are

Every year, Revenue Canada will send you a Notice of Assessment after you’ve filed your taxes. On there, you can see how much you can contribute for the next year, based on your previous year’s income, plus any unused amounts from previous years. There is also a limit as to how much you can contribute to your TFSA, starting from the age of 18. A great tool for understanding your TFSA limit is this calculator.

No matter where retirement fits into your plans, it’s going to be a great time and being financially prepared will help ensure you can enjoy your golden years. So when is the right time to start saving? There is no better time like the present and it will save you down the road!

How To Break Up With Your Bank

To switch or not to switch… that is the question! Switching banks has never been described as an easy or fun task. But what if I could help make the process a bit easier for you? I can’t promise it will be fun, but if you’re already feeling that itch to switch – it will be worth it in the long run.


Got the itch to switch?

So what would make someone get the itch to switch? There are many reasons why someone would want to make a break from their current bank. You could be going through a big life change that challenges you to review your relationship with your current bank. For example, moving to another city for that new job opportunity might make you switch if  you want to do your banking close to home. If you’re recently married like me, you and your hubby would have gone through a debate to decide whose bank gets the honour of opening your joint account.  You could also be looking for better rates because who doesn’t love a good deal? Honestly, as much as a good deal gets me going, the real value is finding someone that treats you like a person and not an account number. Whatever the reason may be, if you’re not happy then it is time to make a change!

How do you do that? I don’t know about you but I like a good checklist so let’s break it down step by step.

Step 1: Browse the options

You wouldn’t buy a book without reading the back and you wouldn’t buy a car off the lot without taking it for a test drive. Your bank shouldn’t be any different. Browse your options and ask yourself want do you want from your financial institution. Things to consider:

  • Would you rather a bank or a credit union? Don’t think there is much of a difference? There is and we’ve broken it down for you in a previous MONEYTALK blog.
  • What is your banking style? In a branch, online, or maybe a mixture of both? Check out what each financial institution specializes in.
  • Is it important that your financial institution is involved and supports your community in which you work, live and play? Take a look at what/how much they support.
  • Most importantly, ask what’s in it for you!

Evaluate your options and take a couple of your top draft picks out for a test drive. I recommend meeting with a representative from the option you are considering to see if they are a right fit for you and can provide what you are missing from your relationship with your current financial institution.

Step 2: Open a new account

You’ve done your research, played the field and now you’re ready to commit… what’s next? Jump in with both feet and open a new account. Most financial institutions offer a variety of ways to open up an account. If you want the human interaction, visit your local branch in your community or if you want the ease and convenience from your couch – there are typically online options (if there isn’t and that is something you value most – return to Step 1).

Pro Tip: Once the account is opened – make a small deposit into your new account to make sure everything is running smoothly.

Step 3: Identify monthly expenses and set up automatic payments

Make a list of your automatic payments that come out of your account on a bi-weekly, monthly and yearly basis. You’ll want to set these up on your new account. Some common automatic transactions to think about:

  • Your hard earned dollars: Direct deposits
  • The roof over your head: Mortgage payments
  • Subscription to chill: Netflix account
  • One more song: Apple Music/Spotify Premium
  • Connection to the world: Cellphone payments
  • License to Leg Day: Gym Membership fees 

Step 4: Transfer majority of your money

You’ve set up your automatic payments and now you have to make sure you have money in there to pay them. Time to transfer the majority of your money into your new account. Key word here is “majority” of your money.

Pro Tip: It’s a good idea to keep some of your money in your old account just in case that pesky internet bill slipped through the cracks.

Having said that, keep your old account open for at least a month to ensure you haven’t missed any of those automatic transactions. When all is clear, transfer the rest of your money into your new account.

Step 5: Closing time

Last, but definitely not least, is to close your account, I repeat CLOSE your account! Just because the balance is zero doesn’t mean it is closed and your bank will continue charging you fees until it is officially closed. Avoid having a “fee”k out when you realize the account was reopened and you now owe your ex-bank money. Contact your bank to ask how to officially close your account and get the closure you need.

 

If you’re feeling that itch to switch don’t be afraid to make a change. At the end of the day, your finances are one of the most important aspects in your life and you should feel safe, valued and confident with your financial institution.

Have any tips for the switch? Let’s hear ’em! Share by using the comment section below to save any headaches for those looking to break up with their bank.

 

4 Quick Tips to Save on Insurance

Home insurance. Life insurance. Car insurance. All important to have, ensuring you’re financially protecting yourself in case of emergency. With each insurance type comes many different options as well as a number of ways you can save. Here are a few savings tips and advice to look into when purchasing (or renewing) insurance.

Home savings that can be spent elsewhere

A part of homeownership includes purchasing home insurance to ensure you’re covered for loss or damage to your property due to unforeseen situations. Home insurance is a must, especially if you live in a condo, townhouse or apartment and share walls with a neighbour. You may trust yourself to not start a fire but you never know when your neighbour will find a way to set a bowl of ramen noodles ablaze. Some insurance companies offer different discounts to help reduce the cost of your home insurance including discounts for:

  • Having a monitored security system
  • Being claims-free for several years
  • Your age and the number of years you’ve been with the company
  • Having a good credit score

A big misconception that comes with buying insurance is that it is a standardized rate among all suppliers. When choosing home insurance, be sure to shop around for the best rates and ask what discounts each company can offer you.

Safe driving does pay off

SGI’s Safe Driver Recognition program rewards drivers with a discount on their vehicle insurance for safe driving. For each year you drive without an incident, you earn a safety point that corresponds to a discount on your vehicle’s plate insurance. As you can earn safety points, you can also lose points for unsafe driving such as speeding, accident, etc. If your safety wasn’t enough motivation to put the phone away while driving, one texting and driving ticket wipes away the points that would have taken you four years to accumulate. That could mean an additional $200 on top of the $280 ticket.

Bundling up

Some insurers will offer discount incentives if you purchase multiple insurances from them. The most common insurance bundles include home insurance and car insurance. When you are shopping around, check how much money you can save by bundling. It’s also very convenient for when renewal time comes around to do it all at once so you don’t have to wonder all year “Wait… is my car insurance due in March? Or is that home insurance?”

Improving your health

Life insurance prepares you for the unexpected and helps protect the people you love if something were to happen to you. When choosing life insurance, consider your family and work situation, life goals and your budget.

If you’re a smoker, your insurance premiums will be higher than a non-smoker. Now you may be thinking, well I just won’t tell my insurance provider that I smoke so I don’t pay as much. Wrong – don’t do this because if you hide it and it’s discovered you’ve been lying, your insurance could be rejected. On a positive note, if you need that extra reason to quit smoking, some insurance companies will consider you a non-smoker if you’ve been smoke-free for a year and will reduce your premiums. Not only will you be able to save on insurance, you’ll also be saving money due to no longer buying your cigarettes. Bonus, Smoker’s Helpline has a Quit to Win Contest where you can enter to win $500 cash if you quit smoking.

 

Whenever you’re purchasing insurance of any kind, be sure to do your research and shop around for the best rate. Always ask questions and inquire about any discounts your provider may offer.

Know of other discounts or incentives to save money on insurance? I’d love to hear them – share with me by using the comment section below.