Stop Making RRSP Excuses

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November is financial literacy month, it’s a time to get your money in order. With that said, I wonder how many people have made an RRSP contribution for 2016 so far? Yes, I realize Christmas is less than two months away and you’re probably not thinking about saving for retirement, but it’s foolish to make RRSP excuses!

I get it, not everyone is interested in saving. Even I admit that spending is much more fun than saving, but if I want to live comfortably in retirement, then I need to save now. Despite what some believe, saving money now won’t affect your lifestyle. Stop making these RRSP excuses and start saving now!

stop making RRSP excuses

I don’t make enough to save right now

I certainly understand that for some people, the cost of living is high, and incomes aren’t exactly growing. No matter what your income level is, try to start saving a little now; even if that means just $20 a paycheque. Trust me, you’re not going to notice $20 a paycheque. Not sure where to find $20? Cut some expenses, like anything. If you don’t start saving now, it’s unlikely you’ll begin later. Expenses always come up (homes, cars, kids), so if not now, when?

I’ll just work longer

Really? You’ll just work longer? This is honestly one of the worst RRSP excuses I’ve ever heard for a variety of reasons. Your health may prevent you from working, your employer might not be interested in keeping you around, and you’ll be taking a job away from someone younger who probably actually needs it. I don’t care how much you like your job, do you really want to be working in your 70’s or 80’s? Remember, people live a lot longer these days. Wouldn’t you rather retire on your own terms?

My kids will take care of me

What? How irresponsible can you be? It’s bad enough that you screwed your own retirement, you’re going to screw your kids too? Yes, that’s right, if you’re depending on your kids to fund your future, you’re screwing their retirement since they’ll be wasting money on you. I get that there are many cultures where generations of families live together, but are you sure your child’s spouse will be okay with this kind of arrangement? Remember, they may have kids to take care of too, do you really want to make them part of the sandwich generation?

I have a company pension

In the past, I totally agreed that having a company pension (especially a defined benefit) was a good enough retirement plan, but these days; I’m not too sure. More and more companies are eliminating or reducing their pensions. My employer recently switched new employees to a defined contribution benefit and there’s no guarantee I won’t lose mine one day. Pensions are very expensive to maintain, and I believe that more and more companies will slowly reduce the value of theirs. It’s silly to believe that your pension alone will cover all of your expenses in your retirement years.

Government benefits will cover me

Yes, it’s true, the the Liberal government plans to expand the Canadian pension plan, but it’s not exactly enough to live on. Yes, there’s also Old Age Security benefits which will give you some additional income, but even those two combined won’t give you a comfortable lifestyle. If you still have a low income, you may qualify for the Guaranteed Income Supplement, but that puts you near the poverty line. Remember, these programs could change at any time. I wouldn’t feel comfortable depending on those benefits, nor should you.

Final word

There will always be RRSP excuses. Don’t tell me that you’re going to start making contributions after Christmas or some other event; it’s just not going to happen. Just figure out a way to start saving now so you won’t have to depend on others in the future.

About Barry Choi

Barry Choi is a Toronto-based personal finance and travel expert who frequently makes media appearances. His blog Money We Have is one of Canada’s most trusted sources when it comes to money and travel. You can find him on Twitter:@barrychoi

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