No Pension at 30? What to Do to Secure Your Retirement

Alexandre Crupi faces many competing financial demands. At 31, the investment specialist at Steadyhand Investment Funds is planning a September wedding with his fiancée, budgeting for a honeymoon and hoping to buy a house someday. On top of that, he currently lacks a workplace pension.

Still, Crupi isn’t ignoring retirement. He’s maximizing contributions to his tax-free savings account (TFSA) and using available RRSP contribution room to save for both short- and long-term goals, including retirement. He has been consistently saving since he began working and lets his investments grow over time. “There’s nothing better than the power of compounding,” he says. “The more you save in your 20s and 30s, the more it can build for you.”

Saving for retirement in your 30s can be difficult. The average couple marries around age 35, and wedding costs can range from $22,000 to $30,000. First-time buyers typically close on homes at about age 36, with national average prices near $718,700. The average age for a first-time mother is about 29.4 years, and raising a child until age 17 can cost roughly $14,000 to $17,000 per year. Many people in their 30s also face incomes that make aggressive retirement saving a challenge.

Financial planners maintain that saving for retirement in your 30s is achievable even while planning for a house, wedding or children. “Be kind to yourself. You can’t do it all,” writes Janet Gray, an advice-only Certified Financial Planner with Money Coaches Canada. “But you can control your spending at every stage of life to allow you to save for what could be a third of your life in retirement.”

Rule #1: Don’t wait

The simplest way to build a retirement nest egg in your 30s—especially without a workplace pension—is to start early. Evan Parubets, head of Steadyhand’s advisory services, began contributing to his RRSP monthly in his 20s. While there’s no single right savings rate, Parubets recommends aiming for 10% to 20% of income where possible. “It may sound high,” he says, “but it’s often the only period when you can save without other major expenses interfering.”

By his late 30s Parubets had married, bought a home and raised children—expenses that reduced his savings rate. Yet because he established good habits earlier, he was able to continue contributing to retirement, even if at a lower pace. “Your savings rate will likely decline, particularly after having kids,” he notes. “That’s okay if you started saving early.”

Personal choices matter: marriage, home ownership and children are common in one’s 30s but not universal. People marry later, opt out of home ownership or choose different family plans. “By your early 30s you should have a clear sense of what you want,” Parubets advises. “You need almost a decade to accomplish many of these goals.”

If you plan to buy a home, Parubets suggests calculating the gap between current rent and the full monthly cost of home ownership—including mortgage payments, property taxes and utilities. Any amount you’re not spending on housing now could instead be directed toward a down payment or retirement savings.

The best tools for saving in your 30s

Anyone in their 30s building retirement savings should use every appropriate financial vehicle. Many employers no longer offer traditional pensions, but some provide RRSP matching—take advantage of those programs if available.

“I maxed that out so I could use it for retirement payments,” Crupi says, referring to employer matching.

Beyond workplace plans, consider the “alphabet soup” of registered accounts: TFSA, RRSP and the FHSA (first home savings account). Each account has unique tax benefits and drawbacks, so review how they fit your goals. The FHSA can be especially useful if you plan to buy a first home: you can contribute up to $40,000, receive an income tax deduction on contributions, and enjoy tax-free growth. If the funds are not used for a qualifying home purchase within 15 years, the balance transfers to your RRSP—effectively providing extra registered room that can still support retirement savings.

Not everyone has already started saving. Some 30-somethings haven’t opened an RRSP, TFSA or FHSA, or may be living paycheck to paycheck. Parubets recommends those people adopt an aggressive, catch-up mindset: trim discretionary spending, consider smaller or delayed milestones (a modest wedding, postponing a home purchase, or long-term renting) and prioritize building an emergency fund and retirement contributions. “You’ve got to play catch-up for the years you missed,” he says.

More on retiring without a pension:

• Self-employed and no pension
• 30 and no pension
• 40 and no pension
• New to Canada and no pension