Saving for the future
Depending on what stage you’re at in your life, what you’re saving for is likely to be constantly changing. But the need to save – for both the short and long term – is a constant.
The earlier you start saving the better. Watch this video to see how saving $500 a month starting at age 25 can make a huge difference compared to saving $1,000 a month when you turn 45.
What savings options are available?
Registered education savings plan (RESP)
A post-secondary education is expensive. Failing to prepare for the costs associated with this kind of education can result in long-term debt. That’s why the RESP is such an important saving tool.
An RESP allows a person (like a parent or grandparent) to set aside money for a beneficiary who can use the funds to pursue an education. The money inside the fund grows tax-free until the designated beneficiary withdraws it. There are two types of plans available; individual plans and family plans. To learn more, speak with your financial security advisor and investment representative.
Tax-free savings account (TFSA)
If you’re looking to grow your investments over time, consider the TFSA, which allows you to earn income on your investments tax-free. Because you can make withdrawals from your TFSA at any time for any purpose, you can use your savings to make a large purchase or you can use your TFSA to help fund your retirement.
Each year the federal government reviews the annual contribution limit for the TFSA. Staying in touch with your financial security advisor and investment representative can help you stay up-to-date on these kinds of changes.
Registered retirement savings plan (RRSP)
An RRSP is a savings plan that’s established by you and registered with the government. And while the purpose of the RRSP is to save for retirement, it may also be used for other purposes – such as buying a home. Keep in mind the tax implications of withdrawing funds from an RRSP.
Registered retirement income fund (RRIF)
An RRIF is designed to give you an income during retirement, using the money you originally saved in your RRSP.
In essence, you transfer money from your RRSP to a RRIF. The withdrawals from your RRIF can provide you with money in retirement for an extended period of time, depending on how much you’ve set aside. Keep in mind, however, that this transfer must be done before the last day of the year in which you turn 71.
To learn more about the TFSA, RRSP, RESP or RRIF, talk to your advisor.
Talk to an expert
Not feeling confident in your finances? You can talk to one of our financial security advisors who will work with you to craft a financial plan tailored to your needs.