Why The Best Time To Start Making Voluntary Contributions To The STRP Is Right Now
The main question around retirement savings is “how much money do I need to save?” The answer is different for everyone, but let’s assume that you need around 70 percent of your pre-retirement income to live comfortably in retirement. The STRP is designed to replace about 35 percent, and the CPP will replace anywhere from 16 to 25 percent depending on your salary levels and retirement date. That leaves a gap that needs to be filled by your own personal savings.
One option to build your own personal retirement savings is to make voluntary contributions to the STRP, and there is good reason to start doing that now.
As the old adage goes, time is money. When you invest a dollar today, that dollar is worth more in a year from now because of the interest added. In the second year, that dollar plus the interest from the previous year earns even more. This is called compound interest, and it can have a powerful effect on your savings. The earlier you start saving, the more powerful it is.
So why should you save your money using voluntary contributions? Here are a few reasons:
Daily professional management of your savings: Your contributions are invested the same as the STRP, meaning that you benefit from our team of investment professionals working every day to invest your money for you.
More investment options: You gain access to investments that you likely would not be able to access on your own, providing you with greater diversification and more risk management.
Saving is automatic: Monthly deductions come directly off your paycheque, before you can spend it on something else.
Maximize your pension: Voluntary contributions can also be used to pay for leave purchases under the STRP, such as a parenting leave.
Cheaper fees: With over $6 billion invested through the STRP, the investment fees that the Plan pays are extremely low. We pass those savings on to you, leaving you with more money in your pocket at retirement.
So don’t wait! Visit the STF website today to start making voluntary contributions to the STRP. It’s never too late to start saving!