You know that it’s important to save for retirement, but are you familiar with the best way to go about it? Here are the answers to three common questions people have about putting aside money for the future.
1. Is an RRSP the best retirement saving option?
A registered retirement savings plan, or RRSP, is a tax-deferred account, which means that any money you contribute is exempt from taxes for as long as it remains unused. Having an RRSP is beneficial for most people. However, if you have a low income, a tax-free savings account (TFSA) may allow you to put aside even more money. Speak with your financial institution to determine which is the best option for you.
2. Should you put more money aside as you get older?
It’s wise to review the amount of money you put aside every year to keep up with inflation. Moreover, many people are able to save more as they get older because they have a higher income and decreased debts.
3. How much money should you set aside at minimum?
Experts recommend setting aside at least 15 per cent of your pre-tax income. That said, you should have an emergency fund with enough money saved to cover living expenses for three to six months.
If you have more questions about saving for retirement, reach out to your financial institution.
