Retirement saving help (Canada)

Gilbert0

I'm still young by working standards (24) but I feel I should start saving now for retirement. I've now got a real "career" type job (over $30/hour) and plan to stay here for the time being. I've basically spent the last years money on stuff I want (new computer, new HDTV, ps3) and now that I have all this, I feel I should save too. Now how do I save my money? What do you do/suggest?

Someone will inevitable say see a financial planner but again who? just someone at my bank (TD)?

Here is a little background. No student loans, no credit card debt, no car payments, have emergency fund. Renting but will want to buy a house in maybe 5-8 years. Right now I'm puting about 30% of my pay into an ING account so it can earn 3% interest. Should say 5-10% of that be in a RRSP instead? Should it all be RRSP (to the max contribution)?

RUNN1NGMAN

1) Build up an emergency fund in your savings account. At least three month's rent plus expenses. When I was single, I had about $6,000. Now that I'm married we have about $10,000. (Edit: sorry, mised where you said you have one)

2) If your employer offers a 401(k) plan or similar retirement savings plan, and they match contributions, start putting at least as much as they match. If you can afford it, save even more.

That should get you started at least. Both of those things you should start doing today if you aren't already.

nome

I've heard RRSP is the Canadian equivalent to America's IRA but don't know the details regarding them. If they are tax deferred investment vehicles like our IRAs then you should definitely put some money in every year. Max it out if possible (what is the annual limit?). Otherwise start out by doing what RUNN1NGMAN just typed. You'll want to invest in some index funds eventually but do these few things first.

ihmmy

yes, talk to your bank person. I use scotiabank and met with my advisor to set up a way of saving for a wedding - you use their bank, their services are provided (or at least, they are with mine and every bank I've ever heard of)

roywhitby

Meet with your personal banker and he/she can set you up.

RRSP's are Registered Retirement Savings Plans. There too many types of investments and plans in this group to go over here but your banker will have any information you need on what type of plan is best for you. When you contribute to your RRSP's you receive a deduction on your tax return against your other income, lowering your taxes. RRSP's accumulate tax free so you won't pay income taxes on interest or dividends reinvested until you cash the RRSP. When you cash in the RRSP's the amount received is included in your income. In other works the RRSP is a tax deferral for investments. RRSP contributions are usually limited to 18% of your income in the previous year but you can carryforward amounts you do not contribute.

The latest federal budget also introduced a special savings account where the interest earned on the account is tax free. You can contribute up to $5,000 each year into this type of account.

As I said before, get an appointment with your banker and you will get the full scoop.