It’s never too early to start saving for retirement. That’s probably something you’ve heard often, yet it can be tough to start when you’re early in your career. Still, investing even $20 a month when you’re in your 20s can really add up. Thanks to the wonder of compound growth, you’ll earn a return on both the money you’re putting away, as well as the growth you previously earned. So the sooner you start to save, the more money you’ll earn in the long run.

Still not convinced? Take a look at this example the Government of Canada provides. Say you want to save $75,000 (which is not enough for most people to retire with when you factor in costs for inflation and lifestyle, unless it’s a top up to a significant pension) and retire in 20 years. If you save $181/month, you’ll have earned $30,960 in interest at a 5% annual compounded rate (which is considered historically high if this were cash savings, not an investment). However, if you start to save just 10 years pre-retirement, you’ll need to save $480/month and earn $16,940 in interest. So you’ll have to save more than double each month, and will earn about half as much on those funds.

While saving early is key, having a plan is just as important. You need to consider all the potential income sources you’ll have, as well as what type of lifestyle you want in retirement. Working with a Certified Cash Flow Specialist (CCS) can help you establish how much money you’ll need to meet your retirement goals. 

Let’s dig deeper into the financial and non-financial retirement considerations. 


One of the most common ways to save for retirement is through a Registered Retirement Savings Plan (RRSP), which automatically converts to a Registered Retirement Income Fund (RRIF) when you turn 71. The maximum you can contribute to your RRSP this year is 18% of your earned income, up to a maximum of $30,780 (2023). See contribution limits for previous years

RRSPs come with two key benefits.

1. Paying less income tax: When you contribute to an RRSP during your working years, that income is deducted from your annual earnings. So, depending on how much you put in, you could get a tax refund, and it may push you into a lower tax bracket for that year. As a result, you’ll pay less income tax.

2. Enjoying tax-deferred growth: You do not pay taxes on any money you invest in an RRSP - until you withdraw it. But until then, your RRSP investment grows tax-free.

However, many people become blinded by these short-term benefits and don’t truly think about the fact that when you withdraw money from an RRSP or RRIF, it’s taxable immediately based on the Government of Canada’s withholding rates. Say you withdraw $5,000. You’ll get hit with a tax of 10% (5% in Quebec) on those funds. So you’ll only receive $4,500. If you withdraw $20,000, there’s a 30% tax (15% in Quebec) on those funds. So you’ll only get $14,000.  

Also, the withholding tax may not cover the full tax costs of your withdrawal. That’s because the withdrawal is counted as income. The withholding tax already taken from you is recorded against the total taxes due on the withdrawal. Your final tax bill for the RRSP/RRIF withdrawal will be based on your marginal tax rate, which is the percent of tax you pay on the last dollar you earn after filing your annual income tax. Essentially, the highest bracket your income hits. For example, if your marginal tax rate is 35% and you withdrew $5,000 and only 10% was withheld, then you still pay another 25% in taxes on that withdrawal during income tax time. 

And if you have an emergency and need to withdraw from your RRSP in your working years, that can push you into an even higher tax bracket, resulting in you paying more income tax. So don’t put all your money into this one basket. Consider spreading your retirement savings amongst other investment vehicles.


You can open up a Tax-Free Savings Account (TFSA) at almost any financial institution and it can hold cash, GICs, mutual funds, or other investment products. The biggest benefit of a TFSA is that you don’t have to pay tax on any earnings. And, unlike RRSPs/RRIFs, you don’t pay any tax on withdrawals when you take money out.

The key consideration with a TFSA is to ensure you don’t go over your current lifetime limit, or you’ll be hit with a 1% tax on the excess per month. In 2023, the annual limit is $6,500. In 2022, it was $6,000. Say you opened a TFSA at age 18 in 2022, but only put in $3,000. The extra $3,000 can be carried over to 2023 for a total limit of $9,500 this year. The maximum room anyone could have is $88,000, assuming they were 18 or older in 2009 when TFSAs were introduced.

On the flip side, you have to be careful about re-contributions. Say you had $10,000 in your TFSA (having opened it a few years earlier), and you withdrew it last year. You can re-contribute the amount, but not in the same calendar year. So you could re-contribute the $10,000 plus this year's limit of $6,500 beginning this year and beyond.


The Canadian Pension Plan (CPP) and Old Age Security (OAS) are government programs that provide retirees with monthly payments. 

CPP is automatically deducted by your employer (if you’re self-employed, you have to pay the employer and employee share of CPP on regular income over $3,500 per year), and payments will begin when you apply. The amount you get depends on how much you contributed, and for how long. For 2023, the maximum gross monthly benefit for a 65-year-old is $1,306.57

Meanwhile, when you turn 65, you’ll automatically receive OAS. If you are aged 65 to 74, then from January 2023 to March 2023, you could get a maximum of $687.56 each month. However, if your annual income is higher than $86,912, you may have to repay part or all of your OAS. If it’s over $141,917, you will not receive any OAS. 

Both benefits are counted as income and, thus, taxable. Experts agree there can be some benefits by delaying CPP or OAS until age 70, including higher monthly payments. For CPP, that could be an additional 0.7% for each month of deferral after 65, according to MoneySense. For OAS, that could mean 0.6% more for every month you delay.

Lifestyle wants and needs

Of course, income sources are not the only considerations when it comes to a happy retirement. Starting to think early about your retirement lifestyle wants and needs is important. As life happens and your goals change, you can always adjust your retirement plans.

Some needs might be medical or long-term care. So consider whether you want to live in a facility, have a caretaker come and help, or perhaps family is able to pitch in. It can be difficult to think about these things when you’re young and healthy, but getting older is a reality that’s best faced with careful consideration. 

And don’t forget about your wants. Do you want to travel, volunteer, take up a hobby, or maybe buy investment property down south and become a snowbird? Creating that picture in your mind will help you visualize where you see yourself in your 70s and beyond. The key is to have a plan as early as possible, and working with a CCS can be an essential part of finding the money to reach your retirement goals.

About CacheFlo

CacheFlo is a financial education company that builds eLearning and tools to help financial professionals and individuals make behaviour-based changes, which allows them to get more life from their money. We want to make it easier for people to predict the impact of their financial choices before they make them.

About the Certified Cash Flow Specialist (CCS) program

CCS professionals go through enhanced cash flow-based training to develop the skill set to deliver behaviour-based cash flow advice. They start the financial planning process with a cash flow plan to genuinely help their clients get more life from their money.

About the Financial Capability Program (FCP)

The FCP combines quick and practical lessons with tools, including Winton, which helps people make financial changes they can stick to. Users can apply what they've learned to their financial situation, thus bridging the knowing-doing gap. The goal of the FCP is to help people get more life from their money.