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Saving for retirement on any income

It’s hard to know what to actually expect when it comes to retiring. Let’s clear the air and take a look at what you need to know for retirement, and how you can start saving today for more freedom tomorrow.

It might feel like eons away. But you should still be considering it whenever you look at your finances and budgets.


If you’re paying attention to financial news or keeping up with Netflix’s Patriot Act with Hasan Minaj, you know retirement is becoming a dicey issue. Many people don’t have a plan for their later years. Not to mention, there are so many different investments, savings and public-sponsored benefits available. So it’s hard to know what to actually expect when it comes to retiring.

Let’s clear the air. And let’s take a look at what you need to know for retirement, and how you can start saving today for more freedom tomorrow.

Government sponsored benefits

Federal retirement programs are where the bulk of retirement income tends to come from. From your very first jobs flipping burgers and clearing tables, every paycheque pays into your Canadian Pension Plan (CPP). When you retire, this is regular monthly income you can receive for the rest of your life. Depending on the age you retire and how long you have been working, the monthly amount can vary.

There are other federal government retirement benefits such as Old Age Security and Guaranteed Income Supplement. Some provinces even have their own added retirement supports, like the Ontario Guaranteed Annual Income System aimed at helping low-income seniors with monthly expenses. Most of these benefits are dependent on your age and income level after retirement but maximizing each of these public benefits will help ensure you can live comfortably after you retire.

Private and employer pension plans

Full-time employers often offer pensions as part of their overall compensation package. Public servants can receive additional pensions, such as the Public Service Pension Plan (PSPP) or the Ontario Municipal Employees Retirement System, and employees who work for private companies often have pensions or retirement saving programs tied to the employer’s bank or benefits provider. These can range in benefit to you, depending on what the employer has negotiated. Typically, when your employer offers an added pension, it becomes a deduction on your regular paycheques that’s either matched or boosted by your employer.

On one hand, it’s money off your paycheque that you can’t control, and that can sometimes make regular expenses a little harder to manage. On the other hand, that’s a lot of extra money locked into your retirement savings. Usually after 30 years of contributing to a pension, or turning 65, the money becomes unlocked and turns into an income you’re given for the rest of your life.

Ways to invest

Two of the most popular products for investing for retirement are Tax-Free Savings Accounts (TFSA) and Registered Retirement Savings Plans (RRSP). Motive Financial offers both of these products with competitive interest return rates, just like what you’ll find with our Savvy Savings Account.

The main difference between the two is when they’re taxed. Funds going into a TFSA are already taxed, so pulling the money (and any extra money you make on the investment) stays tax free no matter when you pull it. With an RRSP, the money isn’t taxed until you pull the funds. You can pull your investments at any time, but unless you’re retiring or using the money to buy your first home, that money becomes subject to extra taxes and fees. But, investing money into an RRSP also means you receive a tax credit. You can also count all your contributions until March 1, 2020 towards your 2019 tax year.

While both TFSAs and RRSPs often see the same kinds of gains on your savings, what you’ll need to consider is when you might need to withdraw from your retirement savings. If you’re in a situation where you may need the money that you’re investing back in a shorter time frame, then a TFSA might be a better fit for you. But if you’re looking to the future and getting all your finances in order for retirement, then consider an RRSP.

Making a little extra to put away for retirement

All of these retirement saving options sounds great. But if you’re living in an expensive city like Toronto or Vancouver and struggling to even make rent, then saving for retirement may feel like a luxury you simply can’t afford. The common notion is to grind in your 20s, build in your 30s and save in your 40s, so that may lead you to believe that saving for retirement won’t be possible until you hit that fourth decade. But even in your second decade, finding ways to keep retirement savings alive are possible.

Starting small with your investments can add up to big savings. Even contributing $20 of each paycheque to an RRSP means you’re getting started on saving for the future. After all, it’s better than not contributing at all.

Another way to save is finding a side-hustle to complement your regular paycheques. This can include anything from ride-sharing and food delivery to freelancing your professional skills. Those freelance gigs aren’t limited to creative professions like writing and design. Plenty of people need help from accountants with taxes and bookkeeping, quick-fix plumbing services or even virtual assistant services. These side businesses can help bring in a few extra dollars for your retirement fund.

The best retirement plans are always the ones that work best for you. It could be a combination of all of these benefits and investments, or focusing on only one. How are you saving for retirement? What side-hustles are you using to invest in your future? Let’s keep the conversation going on Facebook and Twitter. We want to know how you’re saving for retirement.