Retirement planning: Why it's important to start early

Do you have a lot going on—work, family, friends, projects? Not much time to think about retirement? Does it seem like a long way off? If so, you’re probably in no hurry to start planning for this major milestone.

If it makes you feel any better, you’re not alone! But if there are things you dream of doing after you stop working, here are 5 good reasons to start planning for your retirement now.


Your retirement will probably be longer than you think

According to the Institut de la statistique du Québec, life expectancy is increasing. It’s now 84 for women and 81 for men. Statistics Canada also estimates that the average retirement age is now 64. And, according to Retraite Québec, retirement will be around twice as long as it was 50 years ago.

Needless to say, the longer you expect to live and the longer your retirement, the more you’ll need to save. That’s not even including the extra cushion you should have in case something unexpected happens or you get sick. In short, contributing to your retirement savings for a few years more can make a huge difference!


Your pension might not be as generous as you think

Another good argument not to wait too long to start saving for retirement: government pensions might be smaller than you think. Certain factors, like the age at which you want to start receiving your pension, will have an impact on how much you receive.

That means you might receive your full pension only if you wait until age 65 before applying for the Quebec Pension Plan (QPP) and Canada Pension Plan (CPP). And if you stop contributing before that or still haven’t contributed the maximum allowable earnings, you’ll receive a reduced pension.


Currently, the average annual QPP or CPP pension is $6,100 and Old Age Security (OAS) is about $7,400.


You’ll have more time to maximize your savings

For most people, it’s much easier to invest small amounts more often than to invest bigger amounts from time to time. By starting earlier, you’ll realize that saving isn’t all that hard and you’ll make it a habit.

Time is a key factor in retirement planning. If you haven’t already, start saving what you can as soon as you can and increase the frequency based on what you can afford. This habit will also allow you to take advantage of the snowball effect of compound interest—another good reason to start!


You’ll reduce your financial stress

Whether or not retirement still seems a long way off, it’s normal to feel a certain amount of stress when you think about it. The best way to address those worries is to stop putting off your retirement planning.

By taking action as soon as possible based on clear objectives and a written plan, you’ll feel calmer and more confident.


You’ll be in a better position to maintain your lifestyle

By preparing for your retirement early and starting to save as soon as possible, you’ll have a better chance of maintaining your lifestyle when you leave the workforce.

When you have clear goals and know how much your retirement income will be, you can budget accordingly. And with good planning, you’ll increase the chances of being able to do all those things you want to do.

The future belongs to those who start their retirement planning early!

Starting your retirement planning now is the best way to make the most of life later. Talk to your advisor—they’ll be able to give you guidance and support as you prepare for this major milestone.

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