The best ways to save for retirement without changing your lifestyle

Note: The information in square brackets describes audiovisual content other than dialogue or narration.

[Music]

[Image: Waist shot, 3/4 profile, of a man in a suit sitting on a stool. There is a tripod in the foreground to the right.]

[Turquoise text superimposed on the image of a man: The ABCs of retirement planning.]

[Text on left side superimposed on part of the green Desjardins logo: Thomas Herbert, Fin. Pl., Investment Advisor, Financial Planner, Brossard Group

Desjardins Securities]

Thomas Herbert: For most young people in their mid-twenties, retirement planning isn’t necessarily top of mind, and yet it’s a good time to start thinking about it.

While pondering your decisions, here are some helpful tips to keep in mind.

[Turquoise text centred on screen, superimposed on an image of a man: Tips to keep in mind]

[Turquoise text on green background: 1. Have a long-term strategy]

[Image: Man centred in the frame]

Thomas Herbert: The most important thing is to have a plan—a strategy, if you will—that you should stick to as much as possible.

While life is rarely one long, straight line, you should still try to have a plan in place, even if it’s just a rough draft.

[Turquoise text on green background: What percentage of my income do I need to set aside?]

[Image: Man centred in the frame]

[Turquoise text superimposed to the left of the image of a man: Age 25: 5-6% of your annual income]

Thomas Herbert: Are you 25 years old? You should be saving 5% or 6% of your income to maintain the same lifestyle after you retire.

It may seem like ages from now, but trust us, time flies!

You can invest this amount in an RRSP and/or a TFSA.

[Turquoise text superimposed to the right of the image of a man: Age 35-40: 10% of your annual income]

Thomas Herbert: Are you 35 or 40 and haven’t yet started saving on a regular basis?

No problem! If you start saving about 10% of your income now, you should be able to retire relatively worry free.

However, the longer you wait to start saving, the more ground you’ll have to make up every year.

And consistency is your best friend.

Talk to your advisor; setting up automatic withdrawals is an easy way to start saving.

[White text on green background: 2. Everyone is different. A personalized plan.]

[Image: Man centred in the frame]

Thomas Herbert: In addition to the basic guidelines, it’s important to remember that each situation is different and that some adjustments may be needed in order to optimize your savings.

[Turquoise text superimposed to the left of the image of a man: Self-employed worker who saves 7% of their salary in a registered plan. Employee of a company with a pension fund]

Thomas Herbert: For example, a self-employed worker who saves 7% of their salary each year in a registered plan and their friend who is entitled to a company pension and who also saves 7% of their salary won’t be in the same financial situation at age 65, because the friend will receive pension benefits in addition to their personal savings.

However, there’s nothing stopping a self-employed worker from saving more and winding up in the same situation in the end; the same goes for a small business owner who may be relying on the sale of their business to fund their retirement.

[White text on green background: Did you know?]

[Image: Man centred in the frame]

Thomas Herbert: Saving from a young age and on a regular basis is easier than it sounds, not to mention that it will allow you to enjoy retirement to its fullest.

[Image: Front-angle waist shot of a man wearing a suit.]

[Turquoise text on the right superimposed on the image of a man: A 25-year-old who wants to have $500,000 in capital by age 65 would need to save: $5,200 per year,
$200 per pay.]

Thomas Herbert: For example, a person who starts saving for retirement at age 25 and who wants to have $500,000 in capital by age 65 would need to save $5,200 per year, assuming a conservative 4% return on their investments.

That’s only $200 per bi-weekly pay.

[Turquoise text on the left superimposed on the image of a man: A 40-year-old who wants to have $500,000 in capital by age 65 would need to save: $460 per pay.]

Thomas Herbert: But someone who only starts saving at age 40 would have to put away more than double: $460 per pay.

While RRSPs and TFSAs are popular investment vehicles, and rightly so, there are other products that may offer more attractive growth potential.

[Turquoise text on green background: It may be wise to seize this opportunity.]

Thomas Herbert: For example, if you have the opportunity to invest in your family business, which has been growing steadily year over year, it might be a good idea to seize the opportunity and delay more traditional investments in RRSPs for a few years.

If you’re not sure how much you should be saving, you can put some money into a TFSA.

That way, if something unexpected comes up and you need cash, you can always withdraw it without having to pay taxes.

[Turquoise text on the left superimposed on the image of a man: Review your plan every 2-3 years or with every major life event.]

Thomas Herbert: Finally, don’t forget to review your plan every 2-3 years or with every major life event.

[Turquoise text on green background: Brossard Group,

Desjardins Securities. Thomas Herbert, Brossard Group, 1 Place Ville-Marie, Suite 1970, Montréal (Québec)]

[Image: Desjardins logo]

[Text on screen: Wealth Management, Securities]
 
[White text on black background: Warning. Each Desjardins Securities advisor named on the front page of this document or at the beginning of any subsection hereof certifies that the recommendations and opinions expressed herein accurately reflect their personal views about the companies and securities that are the subject of this publication and all other companies and securities mentioned in this publication that are monitored by the advisor. Desjardins Securities may have published opinions that are different from or even run counter to those expressed in this document. These opinions reflect the different points of view, assumptions and analytical methods of the advisors who wrote them. Before making an investment decision based on any recommendations made in this document, the recipient should consider whether such recommendations are appropriate, given the recipient’s particular investment needs, objectives and financial circumstances.

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