An older woman ponders by a window.
As you get older, it’s important to have more retirement money saved so you can start preparing for the day when you leave the workforce.
Canadians believe they need $1.54 million saved to retire comfortably, according to a study by Bank of Montreal. However, over three quarters of Canadians surveyed are worried they will not have enough money in retirement because of rising prices. (1)
So, what can you do if a close family member is far behind in their retirement savings?
Let’s say your mom is 50 years old, makes $45,000 a year, has only $15,000 saved and no RRSP or work-related pension accounts. She is obviously not on track to hit the above target.
Based on these figures, she’s also well off pace from her peers. According to Statistics Canada, the average savings for people aged 45-54 was $437,400, not counting additional financial assets like a home. (2) This data also suggests a lot of other people are also behind schedule — but generally not as much as this hypothetical mom. She’s going to need to do something to make sure she has enough money to live on when she decides to retire.
And the sooner she starts, the easier it will be.
To have a shot at a decent retirement, your mom may have to make some big sacrifices and potentially work longer than the traditional retirement age.
First things first, if your mom has an RRSP with an employer match program, she should ensure she’s contributing the maximum amount to that fund right away. This essentially equates to free money from her employer that she can’t afford to pass up.
Otherwise, she should consider opening a RRSP or TFSA through her bank, so she can start potentially getting a higher return on any savings than she would by keeping her money in an ordinary savings account.
Both RRSP and TFSA accounts have annual contribution limits — $32,490 and $7,000 in 2025, respectively. With both RRSPs and TFSAs, she can contribute much more than just this year’s limit, as any unused contribution room from previous years can be carried forward indefinitely. For RRSPs, she may struggle to hit its limit with her modest salary, but it’s something to keep in mind.
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Next, she’ll need to figure out how much she can set aside for savings. This means building a budget, if she hasn’t already, to account for every penny spent. This would allow her to evaluate her spending and find areas she can trim in order to maximize the amount of cash she can save each month.
Once your mom has done all she can to boost her savings and trim her budget, she may want to consider boosting her income, which would allow her to save more each month.
She can try going for a promotion or looking outside her workplace for a new job with a higher salary. If she has free time to fill, she may also want to think about starting a side hustle. Increasing her income raises her chances of meeting her financial goals sooner and retiring at an earlier age.
To help her prepare for the reality of retirement, your mom may also want to consult with a financial advisor. They can prepare a strategy and offer advice on things like when to retire and when to begin drawing from the Canada Pension Plan (CPP) in order to optimize her retirement benefits.
Your mom has a tough road ahead if she wants to enjoy her retirement, but the sooner she gets serious about her savings, the more secure she’ll be later on.
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BMO (1); Statistics Canada (2)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.