Make the most of your peak earning years
If you’ve been in the work force for 20 years or so, you are now likely in your peak earning years. As your finances improve, now is the time to focus on improving your long-term financial future. Here are some tips.
Pay off debt. Apply some of your extra money to paying down your mortgage and other debts.
Build for retirement. Develop an effective investment portfolio and apply an ever-increasing amount of your income to your portfolio and other vehicles for retirement savings, such as registered retirement savings plans (RRSPs) and tax-free savings accounts (TFSAs). The earlier you invest in RRSPs, for example, the more you maximize the magic of compounding – and by making your maximum RRSP contribution each year, you’ll maximize your tax savings.
Identify your priorities. As your income increases it is tempting to purchase something significant, like a cottage, vehicle, or boat – but beware of spending too much now at the expense of your retirement years. It’s better to identify your priorities and budget to achieve them without compromising your future.
Help your kids. It’s tougher these days for young people to become financially independent. You may have to help yours with tuition and other financial support, perhaps for several years beyond college or university, while they get established in their careers. A registered education savings plan (RESP) can help rein in the rising costs of a post-secondary education. And investing a few dollars each earnings period in a fund for “kids’ support” is a good idea, too.
Support your parents – maybe. You’re a member of the “sandwich generation” and so could find yourself supporting them in some fashion. Include that possibility in your budgeting decisions.
Plan to retire. Whether you intend to work into the traditional retirement years or are aiming to retire early, make sure you have a plan that will get you there in financial comfort.
January 13, 2017
This column, published by Investors Group Financial Services Inc. (in Québec – a Financial Services Firm), and Investors Group Securities Inc. (in Québec, a firm in Financial Planning) presents general information only and is not a solicitation to buy or sell investments. Contact your own advisor for specific advice about your circumstances. For more information on this topic please contact an Investors Group Consultant.