The retirement age in Canada is 65 years. This might seem like a very long time for young people just starting their first jobs. Most pharmacist get their first paying job at age 25 and are gainfully employed for at least 40 years.
It is possible to retire comfortably at 65 years if your start planning early for that grand exit.
If you work with a large corporate pharmacy like Shoppers Drug Mart sign up for their retirement group savings plan. Companies will match a percentage of your contribution, so if you pay $500 per month they will match 3% making your total payment of $515. This is free money going into your retirement savings that will compound and grow overtime.
You might be thinking how will saving for my retirement at age 25 help me now. The portion of retirement contribution that you pay is tax deferred. So if you pay $500 for 1 year, your tax is reduced by $6000.
Using a compounding interest calculator, you can estimate how much money you can retire with easily. Compound Interest Calculator | GetSmarterAboutMoney.ca
Lets look at 2 different retirement savings plan. John contributes $200 every month into his retire savings,
- Total value of his investment $185,875
- Interest Rate 3%
- Interest Earned $89,675
- Years to grow 40
If John contributes $500 every month into his retirement savings,
- Total value of his investment $464,687
- Interest Rate 3%
- Interest Earned $224,187.
- Years to grow 40
You might say that it is not enough money for you to retire. But remember i used low risk investment as an example to show you that even if you put a small amount away, it will make a big difference in the future. Remember, that life happens between age 25 to 65. You will have students loans, mortgage, credit cards and other expenses to pay, so manage your money well and create a budget.
Canadian pension is $15,000. per year. So you will have a big advantage if you save the minimum $200 per month. Saving more is better, but contributing a small amount consistently over 40 years will make a big difference. Start saving early, your future self will thank you. Canada Pension Plan – How much could you receive – Canada.ca
