[quote] A third (32%) of Canadians in their 40s don’t have an RRSP, according to the TD Retirement Savings Poll released last Wednesday.[/quote]
As startling as this poll was, what blew me away is that only 12% make the maximum contribution every year.
[box type=”info”]The Environics poll of 1,006 aged 25 to 64 (who are still working) found 46% of those in their 40s contribute annually to an RRSP but only 12% make the maximum annual contribution every year.[/box]
If someone at 30 years old invests $200,000 and averages a rate of return of just 5% in 30 years they will have $864,388.48 at age 60 (close to retirement age).
If I was 45 years old and invested the same amount with the same rate of return, they would only have a return of $415,785.64. I always love to see the difference when you factor in compounding interest.
[quote]As Kevin O’Leary says on Dragon’s Den, “the numbers don’t lie”.[/quote]
It is important to start saving as early as possible because catchup payments are not going to help.
If you have a defined pension plan, maybe an RRSP is not the best decision for you. You should consider a TFSA account because TFSA withdrawals (during retirement) are considered tax free and they do not affect your benefits which is the reason why I believe that Canadians with defined pension plans should invest in a TFSA before an RRSP.