RETIREMENT PLANNING

Here's why you need to start thinking about retirement in your 20s and your 30s. In Canada, the average retirement depends on CPP, Canadian pension plan and OAS old age security for income during retirement. The catch is for the average person, these two combined amounts work out to about $1600 a month. And that money is pretax, meaning you still have to pay taxes on it. There are a lot of nuances on how your CPP and OAS is calculated and you can even gain more if you defer it past. but for the purpose of this video, we're going to use the average amounts at 865 for the average Canadian. I don't know about you, but $1,600 barely even covers rent in most Canadian cities. So, how do people survive in retirement? Some people receive a workspace pension that they can use on top of their CP and OS in order to live life on the day-to-day. And other people have to depend on personal investments such as TFA or their RSP. And we all know that saving money does not build wealth the same way that investing your money does. And that's why it's so crucial to start earlier than later. Ask yourself, what kind of life do you want to live at 65? And for me, if I'm working for a majority of my life, I want to live a good life in retirement. Let's use Sarah and Lala as an example. Let's say Sarah wanted a million dollars about time she was 65 and she started investing at age 25. She would only need to invest approximately $300 into an investment that returned 8% annually in order to million dollar mark by 65. But if Lala started investing at age 35 and wanted the same $1 million by age 65, she would have to invest approximately $700 a month at an 8% return just to reach the million dollars. As you can see, 10 years makes a massive difference on how much you have to put aside month to month in order to reach the same goal by the same age. For more finance and investing basics made easy for the girls, make sure you follow, like and comment.