We often ask ourselves: When is the best time to start planning for retirement? 30, 40, 50 years? And is it too late after a certain age?
There’s no real ideal age to start planning for retirement, but one thing is for sure: it’s better to start early rather than later! In this area, the time factor is of great importance, explains Sussy Galvez, financial planner, trainer and expert in financial advice and planning.
time is money
In her opinion, the best time to think about this is when a young adult is starting their career in their field of study. “At this point we start to ask ourselves several questions, for example about the pension fund that our employer may offer, the RRSP contributions, etc. We may also wonder about the deductions on our payslips, especially the QPP contribution,” she emphasizes. These different questions provide triggers that help you think about retirement planning.
Why should we think about it so early? Because when it comes to retirement, time is definitely on our side. “The longer the investment horizon, the more time you have to save and the greater the scope for action to better set up your investment strategy,” explains Sussy Galvez.
At age 25, income is likely to be lower than at age 40 and therefore our ability to save will also be lower. “On the other hand, even a small amount that is saved systematically can become large after 35 years due to the effect of long-term interest,” says the planner.
Late in your fifties?
Is it too late if you start saving at 50? Not necessarily, although this is obviously not ideal. It is important to remember that planning far in advance will cost less than planning late. In other words, the longer you wait, the harder you’ll have to work to achieve your retirement goals.
You may also not have enough time to save enough to maintain the same pace of life. “This means, for example, that we will have to sell our house later in order to have the necessary capital to cover our needs,” warns Sussy Galvez.
She therefore recommends consulting a financial planner early on. “It will be able to create different scenarios based on the projection hypothesis standards established by the Quebec Institute of Financial Planning. This way we have a good idea of what income will be available to us in retirement and what standard of living we can afford. Ten years before retirement, we still have the opportunity to adapt to achieve our goal, and 15 years after retirement, the opportunities are even greater,” she asserts.
If necessary, you can also choose to postpone your retirement or temporarily take on a second part-time job to increase your ability to save.
Initiate reflection in young people
If you’re 25 or 30, retirement may seem far away and the motivation to start planning for it may not be there. For this reason, Sussy Galvez recommends starting the dialogue from the perspective of the projects that the young person wants to carry out. “For example, we can talk about moving into an apartment, buying a car, going on a trip, etc., these are short-term goals. To make these projects a reality, money must be set aside. “This is a good start to thinking about saving,” she says.
Another good strategy: let your money grow tax-free while saving to buy a property with CELIAPP. Or kill two birds with one stone with the RRSP, which not only allows you to contribute to your retirement savings, but which can also be used as part of your home ownership plan (RAP).
ADVICE :
· There are sessions on preparing for retirement, such as the session offered free to the general public by Cégep Marie-Victorin, which focuses in particular on the financial aspect of planning.
· The “Time is Money!” calculator. » from the Financial Markets Authority allows you to visualize how time works in our favor when it comes to investing.