By Robert Bogress , February 2013

With the RRSP season contribution deadline for 2012 looming around the corner now is a good time to think about your savings.

Most people look forward to a secure retirement but in order to achieve that you need to start saving now. There are a number of investment vehicles to do this but contributing to your company sponsored pension plan or RRSP is a great way to save.

For employees fortunate enough to have a group retirement plan it is important to maximize the contribution amount of their employer. For instance if your employer is willing to match whatever amount you contribute up to 3% then ensure you also contribute 3%. Far too often employees leave free money on the table that their employer is willing to give them for investing in their future.

By investing regularly through payroll deductions your contributions can be deducted from your pay cheque before you have a chance to spend it somewhere else. This makes saving much more painless. Also your pension plan and RRSP contributions reduce the income tax you pay and investment earnings grow tax-free until you withdraw them.

The sooner you start, the more opportunity you have to grow your money.
In fact your retirement savings can almost double when you save the same amount over a longer period of time; For example:
$100 per month invested for 40 years = $48,000 at 5% rate of return = $148,856
$200 per month invested for 20 years =$48,000 at 5% rate of return = $81,492
This represents a significant $67,364 difference to your retirement by starting earlier than later.
You can also save through a spousal RRSP which is a tax effective way to save especially where one spouse earns more income than the other. If the higher earning spouse contributes to their spouses RRSP it can reduce your combined taxes at retirement when the funds are withdrawn.
By participating in your employer sponsored group plan you also receive lower investment management fees because of the group buying power than you would with an individual RRSP. This difference in fees can have a dramatic impact on your savings over your lifetime.

As you can see there are a lot of reasons to save for your retirement through your group RRSP or pension plan but the most important part is to start saving now.