Retirement Fundamentals

What every Canadian should know about retirement planning

Where do you start?

Believe it or not, you’re already on your way to a comfortable retirement: you’ve taken an active interest in planning your financial future. In this guide you’ll learn how to figure out what you need for retirement, some of the basic rules-of-thumb about making a plan to meet those needs, and what accounts are available to help you save on taxes while saving for your future.

What are the tax-benefits of an RRSP?

There isn’t one number that works for everyone. Your retirement is going to be as unique as the person you are. However, there is a common rule-of-thumb which can give you some milestones to aim for.

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Keep in mind that this is meant to be a high-level guide. Everyone’s needs are different depending on their timeframe and retirement goals.

Popular accounts to use for retirement

There are two big names in accounts that you can use to save for your retirement, each with their own advantages.

Registered Retirement Savings Plan (RRSP)

  • Typically used when you’re in your prime earning years as the tax refund from contributions can be worth more.

  • Money you contribute comes off your taxable income, which can give you a yearly tax refund

  • Can hold a variety of investments (stocks, bonds, ETFs) which grow tax-free while held in the account.

  • If you withdraw, the amount will be added to your taxable income for the year.

  • There is an annual limit of how much you can deposit and it is 18% of previous year's earned income (2020 max. $27,230)

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Tax-Free Savings Account (TFSA)

  • Typically opened no matter where you are on your retirement journey as it is a great account for investing tax-free.

  • Can hold a variety of investments (stocks, bonds, ETFs) which grow tax-free while held in the account.

  • You can withdraw any amount at any time, without any tax consequences.

  • There is an annual limit of how much you can deposit and it is $6,000 for 2021 (lifetime max. is $75,5001)

  • Learn more about using a TFSA for retirement planning

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Key retirement planning tips

  • Fees will drain your savings, so keep them as low as possible. Fees can make a major difference in how much your nest egg grows over the long term. Even a 1% fee, while sounding small, could cost you tens of thousands of dollars. Because what you pay in fees is money that can’t grow and compound over time. Use this calculator to see how big the impact of fees can be on your retirement savings.

  • Have an idea on what age you want to retire. If you want to retire earlier, you will need to have more savings to enjoy a comfortable lifestyle. It also makes it easier to plan when you have a finish line in mind. You can use our retirement calculator to see how much you would need to retire by a certain age.

  • Ask yourself how comfortable you are with risk and invest accordingly. When it comes to investing, you need to know how comfortable you are with big swings in the market. If the thought of your retirement nest egg going through big swings makes you nervous, you may want to invest conservatively. Diversificationand asset allocation are great strategies to learn so you can choose the investments that get to your goal on your terms.

The benefits of saving for retirement with Questrade

  • No annual account fees for accounts, including TFSAs and RRSPs.

  • Your investments are insured for up to $10M so your money is secure, no matter what happens.

  • Ranked #1 by J.D. Power in Investor Satisfaction among self-directed brokers.

  • Award-winning customer service available through email, phone support, and live chat.

  • Free to transfer your RRSP or TFSA from your current institution, with no minimum balance restrictions. See terms >

  • Open an account in minutes from the comfort of your own home. The entire application process is online, whether you want a TFSA or RRSP, and whether you prefer self-directed investing or a pre-built portfolio. Saving for retirement has never been easier.

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Get answers to our frequently asked questions

Can I open an account online?

Yes! Setting up an account is quick and easy, and can be done entirely from the comfort of your own home. Get started >

Is my RRSP locked where it is?

No. It’s your money. You can move your RRSP anywhere you want. If you have an RRSP elsewhere, you can transfer it to Questrade for free. See terms >

Where can I go if I still have questions?

If you have any questions about setting up an account, please feel free to reach out to us at 1.888.298.4515 or through live chat. Our friendly agents are more than happy to help.

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