What are the Best Ways to Save for Retirement?

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It is never too late to start saving for retirement. Of course, the sooner you start, the better, but if you have not started, it is better late than never! We saw the amounts and types of income you will need when you retire. It also depends on the age at which you want to stop working.

Now, let's take a look at a few tips to save.

1. Build a savings plan

A savings plan allows you to find out how much you must set aside at a certain rate to reach your retirement income goal. You can build a savings plan that takes into account the plans to which you are already contributing. Can you count on a workplace pension plan? If so, and if you are a member, verify how much money you have accrued on your statement. If you are not a member, note that it may be worth it, especially if your employer also contributes to it.

2. Save with every pay

Look at how much you can save with every pay. The easiest way to do this is to include it in your budget and set up an automatic transfer. You make the decision once and never have to think about it again. Savings will accrue without you having to make the decision to do so each time. Tell yourself: I pay myself first! You will see your savings increase in value if you invest them properly. You can also ask for advice. And if you get a pay rise, remember to increase your savings!

Do you usually receive a tax refund? If so, try to get into the habit of saving it!

3. Choose a savings account

You must decide which type of account to put your savings in, because when you put money aside, ideally, you want your savings to grow. This means earning income from investments, such as interest income. The income must be added to your income tax return. However, there are types of accounts that allow you to accrue interest or other tax-free investment income. That is what they are made for. The following are your two main options:

• an RRSP (Registered Retirement Savings Plan);
• a TFSA (tax-free savings account).

Registered Retirement Savings Plan (RRSP)

It is useful because if you earn interest or other income from your investments, you will not pay income tax on these amounts.

Another advantage is that when you put money into an RRSP, the income on which you pay income tax decreases. And since your income is usually higher at the end of your career, this is often when it is most profitable to contribute to an RRSP. By reducing the income on which you have already paid income tax, you are entitled to a refund of what you have overpaid!

For example, if you earn $60 000 this year and you contribute $5000 into your RRSP, you will pay income tax on $55 000. You could therefore get a refund because the tax deducted from your pay was based on an income of $60 000.

It is important to know that you will still have to pay income tax later when you withdraw from your RRSP because it will be considered income for the year in which you withdraw it. So, ideally, you should withdraw from your RRSP when your income is at its lowest. That is why it is a good idea to do it when you retire. In addition, you will need a plan to organize the withdrawal of your various incomes. For more information, consult the What is a withdrawal plan? web page.

There is a maximum you can put into an RRSP. It is indicated on your Notice of Assessment from the government of Canada and it is determined based on the income you declared each year on your income tax return.

At the end of your career, verify whether you reached the maximum you could invest into an RRSP, also called contribution room. If it is not the case, look into whether this could be an interesting solution for you.

Tax-free savings account (TFSA)

This is another type of account in which money accrues without you having to pay income tax on the interest you earn. TFSAs also have a maximum you can deposit per year. In 2025, it is $7000. However, unused amounts accrue. For example, a person aged 18 or over in 2009 who has never put money into a TFSA could contribute $102 000 in 2025. Consult the Canada Revenue Agency's website for more information on the TFSA contribution room .

Once you retire, it is the ideal type of account for depositing your savings, because you do not pay income tax when you withdraw money from it. It is not considered to be income. Therefore, it is important to know how much you can put into a TFSA and try to reach the maximum. However, unlike an RRSP, when you put money into a TFSA, it does not reduce the income you pay income tax on.

Your spouse can help you offset your TFSA contribution room so that it is not lost after your death. Your TFSA could then be transferred to him or her upon your death, without your spouse having to pay income tax on the money in it. It will be added to his or her TFSA.

Now you know a little more about saving for retirement. The biggest challenge is keeping yourself motivated. A good way to do so is to make a balance sheet at the end of each year. You will be able to see the evolution of your savings, and you will certainly find that it is reassuring to have some money set aside for your retirement. You will also receive investment statements, which will show you the new value of your investments each year. Do you want to know what your investment options are for growing the savings you have invested into your RRSP or TFSA? Consult the How to make money thanks to your savings? web page, which you can find in the "Mid-career" section.

Who can help me manage my investments?

If you need help, you can consult a financial advisor at your caisse, your bank or at a specialized firm.

If you want a long-term plan to reach your savings goals, you can consult a financial planner with a diploma from the Institute of Financial Planning  and a permit from the Autorité des marchés financiers (AMF).

In any case, find out about their remuneration and the services they offer. Consult the How to choose your representative  page on the Autorité des marchés financiers' website to guide you through your research.