At 35, many Canadians find themselves juggling careers, families, and the occasional splurge on double-doubles at Tim Hortons. Amid all the responsibilities, saving for retirement can often feel like a distant priority. However, understanding the average Registered Retirement Savings Plan (RRSP) balance for this age group can help gauge whether you’re on the right track. Recent data shows that Canadians aged 35 to 44 have an average RRSP balance of $82,100, with a median of $30,000. These numbers highlight a gap. As many are either ahead or significantly behind their peers.
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What’s enough?
So is $82,100 enough for a 35-year-old? Financial advisors often recommend having one to two times your annual salary saved by this age to maintain a comfortable retirement. For instance, if your annual income is $70,000, you should aim to have between $70,000 and $140,000 in your RRSP. While the average balance may meet the lower end of this range, the median paints a bleaker picture, suggesting that many Canadians are falling short of this benchmark.
There are plenty of reasons why RRSP balances might be lower than ideal. Life is expensive with mortgages and childcare, and student loans can take precedence over saving for a retirement that’s decades away. Plus, some Canadians lack access to employer-sponsored retirement savings plans, thus making it harder to consistently contribute. Others may simply not know how much they need to save or feel overwhelmed by investment options.
How to catch up
If you’re looking to catch up, investing in diversified assets through an RRSP can significantly boost your savings. Exchange-traded funds (ETFs) are a popular choice, offering low fees and diversified exposure. A great example is the Vanguard FTSE Global All Cap ex Canada Index ETF (TSX:VXC), which provides access to international equities across various sectors and regions. This ETF excludes Canadian stocks, so it complements your existing Canadian investments nicely.
As of writing, VXC is priced around $64 per share and has delivered a one-year return of approximately 32.3%. This impressive performance reflects the strength of global markets. Historically, VXC has demonstrated resilience and steady growth. Since its inception in 2014, the ETF has achieved an annualized return of 11.4%, thus making it a solid option for long-term investors looking to grow their RRSP balance.
Looking ahead
The future outlook for VXC remains optimistic. Its diversified holdings span global markets, reducing risk while allowing investors to capitalize on economic growth in regions like the U.S., Europe, and Asia. Of course, market fluctuations are inevitable. Yet VXC’s broad exposure can help balance the ups and downs of individual markets.
Including a globally diversified ETF like VXC in your RRSP can enhance both growth and diversification, both critical for long-term success. Even small, consistent contributions to your RRSP can add up over time, thanks to the power of compounding returns. If you start investing $200 monthly at 35, you could significantly increase your retirement savings by the time you reach 65.
Bottom line
The key is to act now. Whether you’re starting from scratch or looking to boost an existing RRSP balance, there’s always room to grow. A combination of regular contributions and smart investments in diversified options like VXC can help close the gap between where you are and where you want to be.
Ultimately, your RRSP is a tool to secure your financial future, and how you use it will determine the kind of retirement you’ll enjoy. With a little focus and a lot of consistency, you’ll be on track to not only meet but exceed your savings goals. And maybe treat yourself to that extra double-double guilt-free!
