What can I do to build my retirement savings faster?
Here are five strategies you can begin to use today to pump up your retirement savings and reach your financial goals.
- Save more easily
The best way to save what you need is to "pay yourself first," by setting up a regular investment program. You can have your Registered Retirement Savings Plan (RSP) contribution automatically deducted from your bank account each month.
- Spend less
If you take the time to write down everything you spend money on, you may spot some ways to reduce discretionary spending. For example, walk, bike, or car pool to work, if possible; make tea or coffee at home and carry it in a thermos; buy in bulk; bundle services.
- Reduce your interest costs
If you're carrying a balance on a credit card, check the annual interest rate. It could be 18%, 21% or even higher. A better choice is to take out a personal loan or line of credit to pay off your card balance. If the loan or line of credit is secured, you might qualify for a rate as low as prime plus two or three percentage points.
- Pay less tax
There are many ways to reduce taxes. Maximize your Registered Retirement Savings Plan (RSP) contributions – which of course also helps you save faster for retirement – and open a Tax-Free Savings Account (TFSA). With a TFSA, your savings grow tax-free. Talk to a professional to find other ways to reduce taxes – such as tax-efficient investing outside your RSP – and ensure you're taking advantage of every tax break available to you.
- Earn higher investment returns
The more growth-oriented investments you can comfortably hold in your portfolio, the higher your potential returns. Work with a BMO Financial Planner, Investment & Retirement Planning* to help you determine the most effective asset allocation for you, based on your risk level and time horizon. If you're concerned about volatility, be sure to read the report "Retirement strategies: What are your options in volatile markets?" available from the BMO Retirement Institute.
For individualized assistance in reaching your retirement savings goals or to get an RSP loan to top up unused contribution room, speak with a BMO Financial Planner today.
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- How much should I be saving to have enough for retirement?
- Paying down debt or saving for retirement – which is more important?
* BMO Financial Planners, Investment & Retirement Planning, are representatives of BMO Investments Inc., a financial services firm and separate legal entity from Bank of Montreal.