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Strategies to make the most out of your RRSPs

With all due respect to Canadian rock legends Trooper, we’re here for a good time and a long time. And just like our homes, handbags and holidays, our lives are so much bigger now. (We could mention our waistline, but we’re working on it so let’s not go there.) So with all that said, how can we ensure we have all that we need for the big dreams we have for our retirement? Let’s start by getting real about how much retirement will cost and then go big with RRSPs.

Recent trends suggest that some of our longstanding assumptions about retirement are changing. And it’s a classic good news/bad news scenario.

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The good news: Thanks to healthier lifestyles and medical advances, we now live longer and are more active than our parents or grandparents. We’re also more likely to retire at a younger age. So while previous generations could expect to spend 15 to 20 years in retirement, you can expect your retirement to last 30 years and maybe more. In other words, if you retire at 60, there’s a good chance either you or your spouse could live to age 90, making retirement a third of your life!

The bad news: Your healthcare and housing costs are likely to go up. In recent years, provincial healthcare budgets have been growing faster than government revenues. Individuals and employers now foot 30% of the country’s total healthcare bill. You can expect to pay more still as provincial healthcare plans trim coverage and governments impose or increase related taxes.

[More: How to stay focused on your retirement savings in an uncertain market]

Recent years have also seen a strong trend among retirees toward condominium living. Condos offer convenience and security, but they also have monthly maintenance fees. And while homeowners can defer repairs and shop for bargains, condominiums typically have work done on a scheduled basis, including costly refurbishing, regardless of what individual owners might want. If there’s a condo in your retirement vision, remember to factor in these costs.

RRSP strategies to help fund retirement

How do you help ensure you’ve got enough money to live well in retirement? The best place to start is your Registered Retirement Savings Plan (RRSP). With its combination of tax deductions and tax-deferred compound growth, an RRSP is one of the best defences against the costs of aging — think of it as the financial equivalent of your favourite anti-wrinkle cream.

[More: That magic number: How much do you really need to retire?]

Here are some strategies to help you make the most of your RRSP:

  • Build in regular contributions. Don’t wait until the deadline. If you make biweekly or monthly contributions part of your budget, your RRSP will have that much extra time to grow.
  • Boost regular deposits. Bumping up your contribution all at once may seem daunting, but adding just an extra $30 a week will amount to more than $1,500 over the year.
  • Reinvest your refund. If you get an income tax refund, consider ploughing it right back into your RRSP. You’ll be giving your retirement savings an extra boost, and may generate another tax refund on your next return.
  • Go for some long-term growth. Strive for a diversified portfolio with enough growth potential, keeping in mind your personal risk level and time horizon.

[More: Retirement rationalizations: 6 misconceptions about RRSPs]

Bigger and better advice

The right professional advice can help you assess whether your RRSP and other savings are positioned to give you the growth you need for your bigger, better, longer — and financially secure — retirement. is a free personal finance and education site for women.

Nothing contained herein is intended to provide personalized financial, legal or tax advice. Before implementing any financial strategy, you should obtain information and advice from your financial, legal and/or tax advisers who are fully aware of your individual circumstances.

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