Earlier in the fall, I started a subscription to Money Sense magazine. I admit that I don’t read it from cover to cover; there are a lot of terms and articles that make me feel completely lost, but I am forcing myself to be regularly exposed to more money management ideas.
Already, I’ve picked up some interesting “life hacks”, including setting a “money date” with your partner to discussing planning and budgeting, and have a list of recommended finance books to check out. I ordered a couple last month (and got a wee bit o’ cashback on Ebates.com to boot) and last week, started Bruce Sellery’s The Moolala Guide to Rockin’ Your RRSPs.
His book gets you to frame your retirement savings through 3 C’s: context, consequences and complexity.
- Context: When it comes to retirement, what is your money for? Traveling the world or settling quietly in a small home? Create a vision that is relevant and realistic for your desires and goals.
- Consequences: What will be the consequences of your current method of retirement savings? What will be the consequences if you don’t save for retirement?
- Complexity: Do you have too many investments spread out in too many places? Or do your money plans lack complexity and depth? Do you know how much you need to retire?
The book is quite well-structured. It`s easy to read and set up in a way that helps you understand why retirement planning is so critical.
I spent a good chunk of Sunday completing the exercises, making notes in Evernote and calculating – for the first time in my life – an estimation of a nest egg that I’d need for retirement 30 some odd years from now, using a Retirement Savings Calculator from TD Canada.* The results are always shocking and most people realize that their current projections don`t necessarily match the daydreams that they have. Bruce reassures us that most people feel anxiety, depression and confused after this exercise. I definitely did, and it`s a good kick in the seat of your pants!
I don`t talk about money a lot with people – I wish I did more – but after chatting with a few coworkers my age (late 20s to early 30s), what shocks me the most is that a few of them** have not even started their retirement savings. AT ALL. It thought I was being lazy for simply maxing out my contribution room each year and not doing any additional research, but, but … not starting at all?! That’s insanely silly and foolish considering the fact that the job security that existed for Baby Boomers no longer exists!
I’ve heard excuses that RRSPs are “just a way of deferring your taxes” (this is true) and that “you’re going to have to pay it later anyway” (this is also true), but uhhhh hello, Home Buyer’s Plan? Or Lifelong Learning Plan? Having security that you will be able to have a home and feed yourself with you`re 72? Or even just getting a nice tax return seems like an incentive enough in itself!
So yes, you are deferring your taxes, but there are many reasons why you should contribute to an RSP even if there is a chance your income could be higher in your 60s. For the coworkers who haven`t started, I`ve offered advice, I`ve offered help and given them tips, but there`s only so much I can say before it falls on deaf ears.
I`m glad at 33 I`m learning more about retirement planning. I wish I had started sooner, but when I was underemployed 5 years ago, I stuck with TSFAs, just as my mom told me. I did the right thing then, deferring contributing to RRSPs when I was still in a lower-income bracket. Now that I’m working full-time, this is a perfect opportunity to keep learning and playing around with my money so that bad luck doesn’t play with my retirement!
*If you’re curious, check out some of the resources that are listed on the Moolala website.
**Sadly, all female coworkers, which drives me even more insane!!!