With a Pre-Authorized Chequing plan you save first, spend second – and ensure a sound future
No one would argue that saving for retirement is a great idea. It’s something we all know we should do. But whether we put the idea into action is another issue. How many of us, when we come down to it, are good savers? Are you?
Turns out that, on average, we Canadians are pretty dismal at saving. According to Statistics Canada1, the current household saving rate is hovering around 4%, a percentage that has fallen drastically since the 1980s. Yet we’re in a time that has seen a rise both in the cost of living and in stock-market volatility. Now, more than ever, it’s vital to ensure you set up a savings plan to provide sufficient income for your retirement years.
So how can you, as a hard-working person, ensure that this happens?
Consider that the maximum contribution to a Registered Retirement Savings Plan (RRSP) is 18% of your T4 income in the previous year. And, that the maximum contribution in 2016 is $25,370.
That means, on average, there is a 14% gap between what we are saving and what we can be saving, solely in RRSPs. And that is excluding all other registered accounts entirely, such as a Tax-Free Savings Account (TFSA).
Maybe you’ve put off saving because it seems like a chore. Here’s a tip for you. Saving gets easier when you make it a habit!
Okay, you say, but how to establish this good habit of saving?
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