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Boost your savings by automating ‘catch-up’ contributions
Your 50s are prime earning years for most Canadians, which means you can boost your savings significantly.
In fact, the Canada Revenue Agency (CRA) allows individuals over 50 to make higher contributions to tax-advantaged accounts such as Registered Retirement Savings Plans (RRSPs) and Tax-Free Savings Accounts (TFSAs).
These accounts can hold many assets such as cash, individual stocks, mutual funds or low-cost exchange traded funds (ETFs). Consider opening a discount brokerage account, like CIBC Investors’ Edge, so you can enjoy low commissions on trades and no or minimal account maintenance charges, depending on the size of your portfolio.
Pay no account fees for RRSPs with a balance of $25,000 or more and TFSAs with a balance of $10,000 or more. For non-registered accounts, the platform waives maintenance fees if the account balance exceeds $10,000. Build your portfolio with CIBC Investor’s Edge and get up to 100 free trades and over $200 in cash back.
Automating your “catch-up” contributions to these accounts via payroll deductions or pre-authorized transfers can help accelerate the growth of your retirement fund.
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Get expert help to maximize your investment returns
Once you've automated your catch-up contributions, you might consider getting expert help to refine your investment strategy. Based on your risk tolerance and investing horizon, you could consider a mix of dividend-paying stocks, alternative assets, mutual funds or bonds.
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Pay off high-interest debt and cut your expenses
Reducing your financial obligations now can significantly impact your retirement readiness. Focus on paying off high interest debt like credit card balances and personal loans, so you can free up more income for savings.
Consider consolidating your debt by taking out a single loan at a lower rate. This can both ease your interest costs and improve your credit score. With Loans Canada, you can shop for the most competitive interest rates on personal and debt consolidation loans, since Loans Canada specializes in comparing rates offered by different lenders.
You don’t need a minimum credit score or annual income to receive personalized loan offers.
Reevaluate your financial plan
By your 50s, you likely have a clearer picture of your retirement timeline and financial needs. So, it’s the perfect time to determine your target retirement age and desired lifestyle.
Will you travel? Downsize your home? Understanding your goals will help you estimate how much you need to save.
Look at your projected income from sources such as Old Age Security (OAS), the Canada Pension Plan (CPP), workplace pensions and personal savings. This will help you identify potential shortfalls.
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The app seamlessly connects all your accounts in one place, giving you a clear view of your investments, net worth, loans and expenses. You can see your investment allocation and adjust your risk profile as needed. Plus, you can create personalized dashboard to track your savings goals, investment performance or to get insights into your cash flow and spending — whatever is most important to you.
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Explore additional income streams
If your current savings are insufficient, look into ways to boost your income:
- Take on freelance work or a side hustle: Earning additional income can be a fast track to saving more.
- Sell unneeded assets: Downsizing and selling unused property or assets can provide a financial boost.
- Consider working longer: Delaying retirement by even a few years can significantly increase your savings and reduce the number of years you need to draw on them.
- Diversify your portfolio with alternative assets: Fine art has long been touted as a solid investment choice due to its inflation-hedging properties, making it a steady option to build your wealth. Using an art investment platform, like Masterworks, you can buy and sell shares of fine art pieces the same way you’d trade stocks.
Delay benefits for bigger payouts
For Canadians nearing retirement, delaying government benefits such as CPP or OAS can lead to increased monthly payouts. For example:
- Delaying CPP past age 65 can increase payments by 8.4% per year (up to age 70).
- Waiting to take OAS benefits can result in a 0.6% increase per month (or 7.2% per year).
Bottom line
Catching up on retirement savings in your 50s is not just possible — it’s achievable with a well-thought-out plan. By taking advantage of tax-advantaged accounts, reducing debt, optimizing investments and boosting income where possible, you can bridge the gap and retire comfortably. Remember, the best time to start was yesterday, but the next best time is today.
