I\u2019m 45 and just beginning to save for retirement seriously. I\u2019ve heard conflicting advice about how much I should have saved by now. Some say I should have one times my annual salary, others say two times. What\u2019s a realistic savings target for someone my age? And how can I catch up if I\u2019m behind?<\/p>\n
We asked Angela Fennelow, CFP, financial planner, Sun Life and CEO of Fennelow Financial Solutions Inc., to answer this one.<\/p>\n
At 45, you\u2019ll want to look at savings strategies that are going to maximize tax efficiencies now and in retirement to maximize growth, Ms. Fennelow said. <\/p>\n
\u201cThe adage of paying yourself first may be simpler to implement than setting a target amount as a function of your annual income,\u201d she added. <\/p>\n
First, take a look at a few things: your annual income and your budget, your current lifestyle and your desired lifestyle in retirement. <\/p>\n
\u201cYou\u2019ve still got time to invest,\u201d she said, \u201cand it is prudent to look at your budget and save as much as you can afford without making your life miserable right now.\u201d <\/p>\n
\u2018I\u2019ve been managing my own finances. Now that I\u2019m entering my 70s, should I simplify my investments?\u2019<\/a><\/p>\n She advised taking advantage of retirement savings matching programs \u2013 if available through your employer \u2013 considering RRSPs and TFSAs and setting up regular weekly, bi-weekly or monthly savings contributions through pre-authorized withdrawals. To see where you\u2019re at now in relation to your goals, meet with an adviser and get a plan in motion.<\/p>\n \u201cWhile I\u2019m not sure where the one times or two times salary idea came from, it does relate nicely back to the \u2018pay yourself first\u2019 concept,\u201d she said. <\/p>\n She pointed out that, even for a person earning at the lower end of the pay scale, the benefits over time are worth it. \u201cFor example, with $35,000 times 10 per cent over 25 years, you\u2019ll have saved $87,500. Considering factors like increasing salary over time, growing contributions and the performance of your retirement savings investments, your savings could reach one to two times your salary.\u201d However, she cautioned that it\u2019s crucial to understand this is not a one-size-fits-all solution. <\/p>\n