Canadian retirees have a wake-up call for the majority of working Canadians who expect to retire in their 60s: stop procrastinating and start saving for retirement now.

According to findings from the TD Retirement Realities Poll, the top piece of advice retirees have for working Canadians is to save more money by creating a budget and sticking to it (52 per cent). However, the poll also found that 15 per cent of working Canadians only plan to save for retirement for less than five years before leaving the workforce. By comparison, more than two-thirds (69 per cent) of retirees say, in hindsight, they should have saved for retirement for 25 years or more.

“If working Canadians don’t make retirement savings a priority, day-to-day expenses and more immediate financial needs can pre-empt saving for the future. Don’t get caught 30 years from now saying ‘I wish I had started saving sooner,’ ” says Kim Parlee, vice-president, TD Wealth Management. “When you start investing early, the impact of compound interest is more powerful in helping your savings grow.”

The poll found that a significant number of working Canadians plan to work longer than current retirees did during their careers. About two-thirds of working Canadians expect to retire in their 60s (64 per cent): 28 per cent in their early 60s and 36 per cent after 65. Sixteen per cent think they will keep working into their seventies. This is later in life than current retirees, who said they left the full-time workforce in their late 50s (36 per cent) or early 60s (25 per cent), with only three per cent working into their 70s.

“Working longer and focusing on setting money aside for retirement at the end of your career can help bolster your savings. However, you can get much more out of your investment dollars when you contribute to savings early in your earning years and continue to do so regularly throughout your working life,” says Cynthia Caskey, vice-president, portfolio manager and sales manager, TD Waterhouse Private Investment Advice.

Caskey says the benefit of starting young is easy to see using the following model: a 25-year-old who starts saving for retirement by investing $100 per month ($1,200 per year) will have a nest egg of close to $200,000 at age 65*. By contrast, if someone decides to start focusing on retirement savings at age 55, for only the last 10 years of his or her career, he or she must invest approximately $1,215 per month ($14,580 per year) each year to match that same nest egg number for retirement*.

Top advice from retirees for today’s working Canadians:

  • Save more by creating and sticking to a budget (52 per cent).
  • Contribute the maximum amount to your RRSP each year (44 per cent).
  • Pay off all debts before retiring (43 per cent).

*Based on a constant six per cent annual rate of return, compounded monthly, to illustrate the advantages of tax-deferred savings and compounded returns. The amounts shown do not necessarily represent the value you would actually accumulate in a RRSP.