No sooner does a Canadian student graduate from college or university (with an average student loan debt of $28,000), than the pressure starts to save for retirement. Add those not-insignificant monthly student loan payments to other essential budget items – rent or mortgage, groceries, childcare, utilities, et cetera – and it’s easy to see why saving for retirement can look like an impossible dream.

The good news is you don’t have to choose between saving for retirement and paying off your student loan. With a little planning and dedication, you can make room today for tomorrow’s golden years.

Here are 5 simple steps to get you started:

1. Track your spending

To free up more funds for your priorities, you’ll first need to find out where your money currently goes. Track your spending for a few months and the results may surprise you. In fact, you’ll almost certainly identify areas where you can spend less. Re-direct those dollars to a tax-free savings account (TFSA) or registered retirement savings plan (RRSP) and, thanks in part to the magic of compound interest, you can watch your savings grow.

2. Know how much you’ll need to retire

The idea of saving for retirement can be less intimidating and more manageable if you take the time to put together a realistic, detailed budget. Take into account both foreseeable expenses like housing, food, healthcare, transportation, travel and hobbies, as well as how much you may potentially receive from the Canadian Pension Plan (CPP)/Quebec Pension Plan (QPP) and Old Age Security (OAS). Looking at these details will help give you a concrete monthly and yearly savings target. 

3. Look into loan forgiveness

Most federal and provincial government student loan programs include a student loan forgiveness component. The Repayment Assistance Program (RAP) and the Repayment Assistance Program for Borrowers with a Permanent Disability (RAP-PD), for example, can reduce the monthly federal loan payments for some borrowers. Your loan may also be forgiven if you’re a doctor or nurse who works in remote or underserved communities. Check your province to see if you qualify.

If you have private loans, you may be able to renegotiate a lower interest rate that could reduce your monthly payment as well.

4. Start small and grow

If you wait for the absolutely perfect moment to save, it may never come. Start with what you can afford and build from there, even if it’s “only” $25, $50 or $250 a month. This will help develop good saving habits and you’ll not only maximize your compound interest and investment returns, but also be able to take advantage of the tax deduction when you contribute to your RRSP. Contributing $25 a month today could help you earn thousands of dollars by the time you’re ready to retire.

5. Make the most of salary increases

As your salary increases, earmark some of that new money for your retirement account. When you’ve finally paid off your student loans – hooray! – maintain your current budget and immediately put the money you’d been using to pay off your debt to work in your ever-growing retirement account.

Don’t let student debt keep you from saving for retirement. Plan ahead and give yourself the flexibility to grow and adapt as your financial needs change.

You’ll accomplish more than you might imagine.