FEBRUARY 3, 2023
By Sun Life Staff
Read time: 3 minutes
If you’re younger, employed, have a mortgage and little kids, it may be a stretch to contribute to your registered retirement savings plan (RRSP). But as your income goes up, increasing your monthly contributions each year can make a difference. Even if it’s only by a small amount.
By giving your RRSP contributions regular raises, you’ll be better able to:
- save more money faster, and
- help ensure you have money for a happy and healthy retirement.
Let’s assume that you start an RRSP at age 35 and plan to retire at age 65.
Initially, you contribute $100 a month ($1,200 a year) at an assumed 4% growth rate. If you continue to save at this rate you would have $69,994 in your plan after 30 years.
Let’s say you increase your monthly RRSP contributions by $50 each year. Then, you would be contributing $1,550 a month ($18,600 a year) by age 64.
As a result, you would accumulate $476,924 in your RRSP account by your planned retirement date. That’s nearly 7 times as much!
How can you boost your own RRSP contributions? Here are 5 ways to help