I dream of a day when we no longer need RRSP campaigns

05 February 2020 by National Bank
I dream of a day when we no longer need RRSP campaigns

Yes, you read that right. At the start of each new year, it’s the same thing: RRSPs appear in the news and in ads from big banks. “It’s time to contribute!”
“Don’t wait until March 1!” And every year, I tell myself that we, banks and individuals alike, could all do better. Let me explain…

I have nothing against RRSPs. Quite the opposite! It’s a great savings vehicle. However, we wouldn't need to run campaigns like these every January and February if saving was part of our routine. Why? Because saving should be part of a solid financial plan and, above all, it should occur all year long.

Why do people contribute $1,000 or $10,000 on March 1? Why don’t they contribute this amount in 26 or 12 equal installments throughout the year and make a final contribution adjustment, if needed, at the end of the year?

With regular, automatic contributions, your savings grow every day based on market fluctuations… That’s the catch: to have at least some financial planning, whether for a project or for retirement, you need to meet with a financial advisor. And on that point, there are plenty of popular myths to debunk.

“I don’t have enough money to meet with an advisor.”

“I’m too insignificant.” “I’m afraid they’ll judge me.” “I don’t have enough savings.” We hear these things all the time whenever we suggest that people meet with an advisor. The myth that you have to make a lot of money to get expert advice unfortunately still persists.

It’s important to remember: : everyone can get advice in person, by phone or from financial institution websites... From the millionaire entrepreneur to the new graduate who has to start paying back their student loan, you just have to want to take charge of your finances.

How do you successfully prepare for retirement?

I must admit that saving money for a car or a pool is way more fun and tangible than saving money for your retirement. When someone is 35 and saving for a retirement that they’ll take at age 67, it’s normal to not feel super excited. The challenge of saving, investing and financial planning is to let go of the need for instant gratification and accept that the benefits are long term. The key is to embrace a new mindset and change your perspective.

You can successfully plan for retirement if you muster up the courage to seek assistance and accept the fact that you might not like the answers the financial advisor gives you. When it comes to retirement, many people already have an idea of what theirs will be like, without taking the time to plan it properly.

“I’m going to apply for Quebec Pension Plan at 60—I’ve been paying into it all my life!” Okay, but is this really the best strategy for you? Do you have other assets that you could draw an income from? Meeting with an advisor is a big step in the right direction. Being open to what they have to say and other possible options could make your retirement even better.

How can you improve your financial situation?

It’s not just advice that can improve your financial situation. Talking about finances and money with your spouse can also spare you some headaches down the road. Unfortunately, it’s still a taboo subject. Most couples don’t talk about it, even when things are going well. Imagine what can happen if a couple decides to separate, especially when you are common-law partners without a cohabitation agreement or even a will.

Many people are still unaware of the legal ramifications of this kind of marital status. If your spouse dies without a will, their share of the house will go to their parents or your children. But not to you. So why do so many people find themselves in this situation every year? To save a few hundred or thousand dollars in notary fees... Once again, people need to understand how important proper planning is.

The year 2020 and the health crisis have transformed us all. They’ve not only taught us the need to adapt and think about different solutions but, also to better prepare for the unforeseeable, such as saving for an emergency fund. All the more reason to better manage your short and long-term financial planning.

I envy the automotive industry…

What do people do when they want to buy a new car? They go online. They spend three or four evenings test-driving their favourite models. They come home from visit with the dealer’s business card, prices, terms of purchase, and a list of any extras they want. Then they discuss it, make a decision and buy a car.

Why don’t couples manage their finances the way they buy a car? Especially since a single appointment might be all that’s needed. Having a plan for your savings is more than just necessary. It may not give you instant gratification, but a few hours of your time for your peace of mind is priceless.

Have you met with a financial advisor yet? If not, I invite you to come and meet with us. This meeting could be the best gift you ever gave yourself!

Nancy Paquet
Executive Vice-President, Savings and Investment Strategy

This article has been reviewed on January 25th 2021.

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