Every year I add “save for retirement” to my list of New Year’s resolutions. I’ve taken part in employer pension plans and contributed to my registered retirement savings plan (RRSP) when possible, but balancing retirement saving with paying down debt and covering monthly living costs can be tough. It turns out I’m not alone: many young Canadians struggle to know exactly how to prioritize retirement savings while managing other financial demands.
Although saving for retirement is a top priority for many, a significant number of Canadians did not set aside money for retirement last year. Younger workers in particular face pressure from rising living costs, concerns about inflation and housing affordability, yet many still value good pension benefits and long-term saving options.
How much does the average young Canadian have saved for retirement?
Looking at pre-existing data, the average Canadian under 35 had modest balances in registered retirement accounts and tax-free savings accounts (TFSAs). If your own savings are below those averages, it’s still possible to build a meaningful nest egg by starting a plan and contributing consistently.
It helps to understand the difference between “saving” and “investing” for retirement. Saving typically means putting cash into an interest-paying account such as a TFSA or RRSP, where rates may be modest but the capital is secure. Investing means holding assets—stocks, bonds, exchange-traded funds (ETFs) or mutual funds—inside those registered accounts. Investments can grow faster over time but carry higher risk. Bonds and guaranteed investment certificates (GICs) generally offer lower risk and lower returns than stocks. Before investing, assess your risk tolerance and time horizon so your mix of assets matches your comfort with short-term fluctuations and your long-term goals.
For those who are new to saving, there are simple, practical steps to start making progress even when you’re juggling other priorities.
Ask yourself: How much am I able to save for retirement?
If you’re carrying student debt or starting your first job, you may wonder whether retirement saving should wait. Financial planners generally recommend beginning as early as you have steady income, because time is one of the most powerful advantages for retirement savers: compound growth multiplies contributions over decades. At the same time, prioritizing repayment of high-interest debt—like credit cards—usually makes sense before increasing investing. If your debt carries 19%–24% interest, paying it down will often deliver a better guaranteed “return” than most investments.
Even while reducing debt, aim to build at least a small emergency buffer—one month of expenses is a realistic short-term goal for many people, and it helps prevent new debt when unexpected costs arise. As your situation improves, expand that fund to cover three to six months of living expenses.
The best ways to save for retirement in Canada for Gen Zers
One of the simplest ways young workers can accelerate retirement savings is to take full advantage of employer matching programs, when available. Many employers match a portion of your contributions to a group RRSP or pension plan; contributing enough to capture the full match is essentially extra, immediate compensation and a valuable boost to your long-term balance.
If your workplace doesn’t offer matching, set up automatic contributions to an RRSP, a TFSA, or both. Automatic plans remove the friction of saving and help you stay consistent. Decide which account makes most sense for each situation: RRSPs provide tax-deferral on contributions (beneficial when you expect to be in a lower tax bracket in retirement), while TFSAs offer tax-free growth and withdrawals, which can be preferable for flexible access or tax planning.
Many young investors find ETFs appealing because they offer low-cost diversification and require less day-to-day management than picking individual stocks. ETFs can be a practical core holding for long-term retirement portfolios, helping reduce volatility through broad exposure across companies and sectors.
If you can’t commit to regular contributions right away, direct any extra funds toward retirement when they appear—year-end bonuses, tax refunds, gifts and government rebates are good opportunities to top up your registered accounts. Taking on a short-term side gig can also free up additional funds to invest, and some rewards programs allow you to convert points into investments in retirement accounts—check the specifics of your program.
How much of your income should you save for retirement?
There’s no single formula that fits everyone, because retirement needs depend on your planned retirement age, desired lifestyle and other income sources such as government benefits or workplace pensions. A common planning guideline is to aim for saving roughly 15% of your net income each year when you don’t receive employer matching. That rate can be adjusted up or down based on your goals, other savings, and your employer’s contributions.
To estimate how much you may need in total, consider staged benchmarks and personal goals rather than a single national target. Financial planners often recommend saving a multiple of your salary by certain ages—for example, aiming to have one year’s salary saved by 30 and progressively higher multiples as you approach retirement. Factor in expected government benefits and any defined-benefit pensions when calculating your personal target.
| Initial investment | Additional monthly contributions | Interest earned over 30 years (in an account earning 3% interest) | Total value of the investment after 30 years |
| $50 | $50 | $10,617 | $28,667 |
| $75 | $75 | $15,925 | $43,000 |
| $100 | $100 | $21,233 | $57,333 |
Start small and let your money work for you
Pausing my automatic RRSP contributions helped me rebalance my monthly budget, but I still find ways to keep retirement saving moving forward. For example, depositing year-end bonuses or occasional windfalls into an RRSP or TFSA is a simple way to stay on track without a monthly commitment. Creating a realistic budget is the first step to identifying money you can redirect to long-term saving.
Even modest, consistent contributions add up. Allocating an extra $100 from each paycheque to a retirement account and investing it over decades can grow into a significant amount thanks to compounding returns. The psychological benefit of a hands-off, disciplined approach—whether through automatic transfers, diversified ETFs, or a robo-advisor—can make it easier to stick with a plan through market ups and downs.
When you start and how you prioritize retirement saving depends on your personal situation. The important thing is to make a plan that fits your budget, capture any employer matching, and increase contributions as your income and financial stability improve.
Read more about investing:
- Which type of ETF investor are you?
- Listen up Gen Z: How to invest as a young person
- How to start investing with ETFs in your 20s
- What’s the average monthly retirement income in Canada?