Don’t Panic: How to Handle Worrying About Retirement Savings

This post is sponsored by the Canada Pension Plan Investment Board, but all opinions and stories are my own.

I’ve been thinking a lot about retirement lately—specifically, whether I’m actually doing and saving enough.

Maybe it’s because I just turned 30 (only 30 to 35 years left to save!) or because FIRE—aka Financial Independence, Retire Early—has been in the news so much lately. Maybe it’s because since we bought our house, my personal savings rate isn’t over 50% anymore for a whole range of reasons. Maybe it’s because here in Ottawa, we have a ton of friends who are more or less set for retirement due to careers they enjoy in the public sector, which come with amazing pensions.

All of those things are probably factors in my latest retirement freak-out, but what I’m doing about my small “Am I doing enough for retirement???” freak-out is much more useful to everyone than why I’m having it in the first place.

So on the off chance I’m not alone on not feeling entirely confident about my retirement plan and prospects, here’s what I’m doing to address my latest round of slight, gentle panic about my retirement savings.

Upping my retirement contributions

This is an obvious one, right? The easiest way to address feeling like you’re not saving enough is to save more. For me, I’ve always based my retirement contributions on the guideline that you should save 10% of your pre-tax income, so if you make $50,000 you should put $5,000 away for retirement every year.

However, two things led me to up my contributions from that level recently. One, although no one can really say for sure what’s going to happen over the next 30 years, many experts are advising that millennials should be looking at saving closer to 15% or 20% of their salaries for retirement.

And sure, once upon a time I saved half my income, but that was for a variety of goals—not just retirement. So now that a few of them are settled, like the house and the wedding, it’s time to inch up the retirement portion.

Plus, I never really considered blog income as part of my income. I never factored it into my annual “salary” numbers, so I never saved 10% of what I actually earn every year—I focused solely on my full-time job for that. Now, I’m taking a closer look at how much I earn from all sources and increasing my retirement savings based on that number instead.

Planning for “extra” money

“Oh sure, just get extra money, what a great suggestion,” said literally no person reading this. But even if you’re thinking that planning for extra money is something you don’t need to do and that it’ll have no impact on your retirement plans, think again.

Whether it’s a tax refund, a bonus at work, a gift, or a freelance project, there are lots of times during the year when you might end up with some cash you weren’t expecting—and ask any lottery winner how easy it is to blow through money if you don’t have a plan for it.

Your plan doesn’t have to be all that complicated, but if you know retirement is a priority for you right now, your plan might be to stash 50% of all unexpected income in a retirement account. See? Simple, and will help make sure that when money does pop up unexpectedly, you’re ready for it.

Keeping CPP in mind

While it’s likely I’ll never have a pension from my employer, I like to keep in mind that here in Canada, I’m not solely relying on the money I save myself. Specifically, every employed Canadian pays into the Canada Pension Plan (CPP) based on their incomes, and self-employed Canadians can opt to pay into it as well.

If you were 65 today and qualified for the maximum CPP benefit, you’d have a monthly pension of $1,134.17—and it’s indexed to inflation. Luckily for millennials like me, the CPP is backed by a team of investment professionals who are tasked with ensuring our contributions are working to keep CPP around for a loooong time. (This post from Boomer and Echo does a good job breaking down how much you’ll get from the CCP.)

The Canada Pension Plan Investment Board (CPPIB) is essentially a shared investment advisor that Canadians have working on our behalf to make sure our CPP benefits will be there for the long run. And whether you have an employer pension or not, this piece of the retirement puzzle can supplement your RRSP, TFSA, and other savings, and help you remember you’re not on your own when it comes to retirement.

The CPPIB has a diversified, long-term, and sustainable investment strategy so you can feel confident that CPP will there when you retire and for generations to come.

Planning to speak to an advisor

Even with all that said and done, and with the investment pros at the CPPIB looking out for your CPP benefits, there’s really nothing that can replace independent, unbiased financial advice.

In the next year, I’m planning to book a session with a fee-only CFP to talk all things retirement planning. I love writing about money, but there are times when everyone needs advice from a professional, and I think it’s the right time for us to sit down with someone and get clear on how we’re doing.

Plus if we’re actually not doing so hot, we’ve got 30 years to fix it.

Retirement planning is complex

Even though there are some parts of retirement planning that you can do on your own, if you’re feeling uneasy about your savings, it’s equally important to work with professionals when it makes sense. Luckily, the CPP part of our Canadian retirement equation is already in the hands of investment pros, so we can focus on our individual RRSP and TFSA savings instead.