It's Your Money  

It's never too late to start saving for retirement

Late-stage retirement saving

For those in their 40s, traditionally called “over the hill” and who haven't yet begun saving for retirement, the thought of catching up can feel daunting. Especially in the face of record-high costs of living and other financial challenges.

However, while the task may seem formidable, it's never too late to start saving for retirement. With careful planning, discipline and a proactive approach, Canadians in their 40s can take meaningful steps to secure their financial future.

Instead of feeling that it is simply too late to get on the right track, consider taking these eight steps to getting your retirement plans started:

1. Assess your current financial situation—The first step in jumpstarting retirement planning is to take stock of your current financial situation. Gather information about your income, expenses, assets, and debts to get a clear understanding of where you stand. Evaluate your spending habits and identify areas where you can cut back to free up funds for retirement savings.

2. Set clear and achievable goals—Establishing defined and realistic goals is essential for staying motivated and focused. Determine how much you need to save for retirement based on your desired lifestyle, retirement age, and expected expenses. Break down your goals into manageable milestones and track your progress regularly to stay on target.

3. Prioritize debt repayment—High-interest debt can be a significant obstacle to saving for retirement. Prioritize debt repayment to reduce interest expenses and free up funds for retirement savings. Focus on paying off high-interest debt first, such as credit card balances and personal loans, before tackling lower-interest debt such as mortgages or student loans. You should typically make minimum payments only on every debt except the one that has the highest interest rate to clear that one off first.

4. Maximize contributions to retirement accounts—Take advantage of employer-matched retirement accounts first. Then, look at tax-advantaged accounts such as Registered Retirement Savings Plans (RRSPs) and Tax-Free Savings Accounts (TFSAs) to maximize your savings potential. Consider contributing as much as possible to these accounts, taking into account contribution limits and eligibility criteria.

5. Embrace the power of compounding—Even if you're starting later than you would have liked, the power of compounding can still work in your favor. By investing your savings wisely and allowing them to grow over time, you can harness the exponential growth potential of compound interest to accelerate your retirement savings. Start investing early and regularly to make the most of compounding returns.

6. Seek professional financial advice—Navigating retirement savings can be complex, especially if you're starting later in life. Consider seeking guidance from a qualified financial planner who can help you develop a personalized retirement savings strategy tailored to your unique financial circumstances and goals. A professional planner can provide valuable insights, recommendations, and ongoing support to help you make informed decisions about your retirement savings.

7. Embrace a flexible approach—Flexibility is key when it comes to retirement savings, especially if you're starting later in life. Be prepared to adjust your savings goals and strategies as your financial situation evolves. Stay adaptable and open to new opportunities for increasing your savings and optimizing your retirement plan.

8. Stay motivated and consistent—Saving for retirement requires discipline and perseverance, especially when starting later in life. Stay motivated by reminding yourself of the long-term benefits of retirement savings, such as financial security, independence, and peace of mind. Celebrate small victories along the way and stay consistent with your savings efforts, even during challenging times.

While starting to save for retirement later than planned may present unique challenges, it's never too late to get started. Sure, it would have been great to start 10 years ago but waiting another 10 years to figure it out is far worse. The best day to start is today!

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

More It's Your Money articles

About the Author

Brett Millard is vice-president and a member of the executive leadership team at FP Canada, the national professional body for the financial planning industry. A not-for-profit organization, FP Canada works in the public interest to foster better financial health for all Canadians by leading the advancement of professional financial planning in Canada. 

He has worked in the financial advice industry for more than 15 years and is designated as a chartered investment manager (CIM) and is a certified financial planner (CFP).

He has written a weekly financial planning column since 2012 and provides his readers with easy to understand explanations of the complex financial challenges they face in every stage of life. Enhancing the financial literacy of Canadian consumers is a top priority for Brett and his ongoing efforts as a finance writer focus on that initiative. 

Please let Brett know if you have any topics you’d like him to cover in future columns ,or if you’d like a referral to a qualified CFP professional in your area, by emailing him at [email protected].


The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

Previous Stories