Should you be thinking about your retirement?

Only 40 years ago, it would have been sufficient to save only 3% of your annual income in order to be able to retire happily.  Now, saving 10% of your income if you fall between the $50k-$150k income brackets puts you at risk of falling short when it comes time to retire.

Back in February, the Bank of Canada had proposed what was known as negative interest rates.  This would mean that rather than receiving interest on you balance, eventually you will instead pay the banks for holding your money.  When these interest rates drop, the downfall will last longer than expected along with investment returns.  What does this mean for you?  You’re going to have to start saving a lot more for retirement or retire later than expected.

The chances of you receiving a high return on your own savings if you pay towards a more professional investment is unlikely in comparison to pension plans.   This would encourage people to stay away from risky investments that could carry a high reward.  Do you have an RRSP or TFSA?  It could be hard to earn more than 4% a year over the next 30 years.

Need an example? A young couple in their early thirties would have to save about 10-12% of their income each year in order to comfortably retire at 65.

It’s never too early or late to think about your retirement.

This post is sponsored by Choras.  Check out their weekly blog on the economy, global affairs and tips on your money here!

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