The March 1st deadline for RRSP contributions is fast approaching, if you are still unsure about making a contribution; here are some guidelines to help you make an informed decision.

To start, you need to take your age, anticipated life goals and other milestones into consideration when making your investment decisions.

Here are some investing strategies for different life stages:

In Your 20s – getting that first job

  • Though you may be just starting off your career with retirement way in the future, it is not too early to establish a long-term financial plan.
  • With years to your advantage, consider taking a more aggressive approach to your asset mix by diversifying with a higher mix of stocks compared to bonds or cash.
  • Pay off your debts as soon as possible and try to save as much as you can.

In Your 30s and 40s – family and big purchases

  • You may be getting married, raising a family, saving for your children’s education, and making large purchases such as a house, car or cottage.
  • Build a relatively balanced portfolio across all asset classes that match your risk tolerance.  Include a Registered Education Savings Plan (RESP) to help save for your child’s university or college education.
  • Establish a regular investment plan, set it up so you automatically put money into your RRSP on a monthly basis.  Investing smaller amounts regularly is easier than scraping up a lump sum at the end of the year.  This strategy also allows you to take advantage of dollar-cost-averaging, taking advantage market fluctuations.
  • Some employers will match your RRSP contributions up to a maximum, so be sure to contribute enough to take full advantage of this program.

In Your 50s and 60s – serious business

  • Retirement is on the horizon.  It is time to think about preserving your assets, start by altering your asset mix into a lower risk portfolio.  Consider a balanced approach that includes a good portion of fixed income instruments.
  • Create a snapshot of how much you own to help you understand how your assets will help fund your retirement.  For instance, your RRSP will be a good source of regular income; while other accounts like your TFSA can pay for vacations or other large purchases.
  • Pay off all outstanding debts.

In Your 60s and older – looking at retirement

  • Adjust your financial plan to achieve your ideal retirement lifestyle, whether that includes taking early retirement or an extended trip, or launching a second career.
  • Consider income-generating investments coupled with a conservative asset mix.
  • Maximize your RRSP contributions and consider an RRSP loan for making catch-up contributions, as you will only be able to contribute to your RRSP until the year you turn 71.
  • Review and update your Will and Power of Attorneys, as well as your beneficiary designations on your RRSPs, RRIFs, TFSAs and insurance policies.

Whether retirement is many years away or just around the corner it is important to implement the strategies that will make the most of your money.  By making wise investment decisions now, and reviewing your financial plan regularly, you will be in a much better position to achieve all of your retirement goals.

If we need to meet before the deadline, or you want to get a head start for next year, give me a call I am always here to help.

Tracey

Source:  Original article posted on Advisor.ca 01-23-13.  BMO Financial Group.MT 2013 -02 -7