Saving for your future
If you’re like many other Canadians, then you know you should be saving for your future, but you think you have lots of time to start. The only problem with that way of thinking is that the longer you wait the more you will have to save just to get to the same place.
Lifespans are getting longer, we will need more money in retirement than our parents did. What if you’re forced to retire early? What if you want to retire early?
Here is a chart illustrating the importance of starting early.
The Growth of $1 invested just one time – nothing added
|
# Years |
10% |
12% |
14% |
|
40 |
45.00 |
93.00 |
189.00 |
|
45 |
73.00 |
164.00 |
364.00 |
|
50 |
117.00 |
289.00 |
700.00 |
|
55 |
189.00 |
509.00 |
1,348.00 |
|
60 |
304.00 |
898.00 |
2,596.00 |
|
65 |
490.00 |
1,582.00 |
4,998.00 |
|
70 |
789.00 |
2,788.00 |
9,624.00 |
|
75 |
1,271.00 |
4,913.00 |
18,530.00 |
|
80 |
2,048.00 |
8,658.00 |
35,677.00 |
If you own your own business, then unless you are contributing to your pension on your own, you need to be saving for retirement more than anyone.
You should also think about how much you need for the entire length of your retirement. What may be more than enough for you when you retire, may leave you struggling a decade later after the effect of inflation have taken their toll.
Saving 10% is only a starting point, once you have become accustome 10% then try increasing a little bit every few months, or as often as you feel comfortable. Obviously the more you’re saving the quicker you will reach your goals.
Also keep in mind that when you put 10% into a registered savings plan than you will not actually have 10% less money in your pocket. Because the money that you invest will be taken off of the total amount of income that you will have to pay taxes on, it will be less than 10% depending on your tax bracket.
Asset Allocation Table
|
Your risk level |
Bonds |
Stocks |
|
Low risk |
=age |
100-age |
|
Medium risk |
Age-10 |
110-age |
|
Aggressive |
Age-20 |
120 - age |
Do the calculation, the resulting number is the percentage that you should have in this type of investment.
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