Plan your retirement: sow today to reap tomorrow!
oct. 28
2 min read
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Retirement may seem a long way off, but it's essential to start preparing for it now. To help you get started, here are three essential questions to ask yourself:
1. How much should you save for retirement?
To maintain a good standard of living in retirement, aim for an income of between 60% and 80% of your current salary. This percentage may vary according to your plans and desired lifestyle. Consider the following before you start:
Your current salary ;
The age at which you will apply for your pension (QPP, OAS);
The pension plans in which you participate (e.g., your employer's plan);
The amounts you save each month.
2. Where will your retirement income come from?
Government plans such as Old Age Security (OAS) and the Quebec Pension Plan (QPP) provide you with an income base. However, they don't always cover all your needs. Complement them with :
A pension plan offered by your employer;
Your personal savings (RRSP, TFSA, etc.).
3. At what age should you retire?
Your retirement age depends on your finances, your health and your personal plans. The longer you delay applying for your QPP retirement pension, the more advantageous the amount will be for the rest of your life. Consult your statement of participation to estimate your pension at different ages, and plan how to maximize your income at the right time.
Taking charge of your retirement plan today means ensuring a brighter future!
Compound interest is a powerful growth engine for your retirement savings. Unlike simple interest, which applies only to the initial amount, compound interest allows you to earn interest on interest already accumulated. The earlier you start, the greater the effect of compound interest.
Here's an example of the power of compound interest:
Let's say you save $10,000 with an annual rate of return of 5%, and you let this money grow without making any new deposits. Here's how your savings will evolve over time:
Year | Invested amount | Annual interest (5%) | Total value at the end of the year |
1 | 10 000,00 $ | 500,00 $ | 10 500,00 $ |
2 | 10 500,00 $ | 525,00 $ | 11 025,00 $ |
3 | 11 025,00 $ | 551,25 $ | 11 576,25 $ |
5 | 12 155,06 $ | 607,76 $ | 12 762,82 $ |
10 | 15 513,28 $ | 775,67 $ | 16 288,95 $ |
20 | 25 269,50 $ | 1 263,48 $ | 26 532,98 $ |
30 | 41 161,36 $ | 2 058,06 $ | 43 219,42 $ |
Conclusion:
In 30 years, your initial $10,000 has become $43,219.42, thanks to compound interest. The effect gets more impressive with time: the earlier you start, the more you'll reap in the long run!
Compound interest shows you that it's never too early to start saving for your retirement. leo scelerisque, elementum nisl sed, interdum ante. Nulla facilisi.
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