It is important to make saving a part of your monthly budget plan. One of the easiest ways to do this is by setting up regular automatic transfers from your chequing account to a high-interest savings account, RRSP or other investment each month.
An automatic savings program is also a great way to begin saving for an emergency fund to deal with unexpected events, such as a sudden loss of income; the fund should be equivalent to three to six months’ salary. With an automatic savings program, you set money aside without having to think about it. It will help you if your income drops or stops unexpectedly. At the same time, it will give more options if you decide to change jobs. You’ll be able to continue meeting your financial obligations while looking for new employment.
If this is your first job, retirement may seem to be a long way off. Paying off debt, purchasing your first home or raising a family may be more immediate priorities, but it is just as important to get your plans and savings in place for retirement. FCAC has the information you need to start planning your retirement.
A pension plan can make up a significant part of your retirement income. Under the plan, your employer sets aside a small portion of your pay cheque before taxes, and the money goes into a fund that will be used to provide you with a regular income when you retire. You do not pay taxes on contributions made by yourself or your employer as long as the money stays in the plan.
Some employers may also match all or part of what you contribute to the pension fund. For example, your employer may contribute 50 cents or one dollar for every dollar you put in, up to a certain percentage of your salary. This will help your savings grow faster and increase the amount of pension income available to you in retirement. If possible, make the highest contribution that the plan allows and that the company will match.
If your job does not offer retirement options, you will have to set up a retirement vehicle outside of your employment. FCAC has the information you need to start planning your retirement.
You may also be able to contribute to a payroll savings plan, such as the Canada Savings Bond Payroll Savings Program. With a payroll savings plan, you specify an amount that you want your employer to deduct from your gross pay, as a contribution toward the savings plan.
Once you decide how much to save, you’ll have to figure out where to invest your money. You can choose from a number of investment options, including:
FCAC can help you learn more about the savings and investment options available to you.