The Number 1 Retirement Mistake Canadians Are Making Today

Here’s how to meet your retirement goals with reliable stocks like Fairfax Financial Holdings (TSX:FFH), Fairfax Africa Holdings (TSX:FAH.U), and Fairfax India Holdings (TSX:FIH.U).

| More on:

Canadians aren’t ready for retirement. A new survey from Royal Bank of Canada found that regardless of their personal wealth, most Canadians simply haven’t saved enough money. The figures get even worse the older a person is. Here’s how the numbers break down.

For Canadians above 50 years old, those that report assets of more than $100,000 say they wish to have a nest egg of around $1 million by the time they retire. So far, the average person in this group is running $275,000 short of their goal. Of Canadians above 50 years old that have less than $100,000 in savings, the average person is a whopping $574,000 short of their target.

And there you have it—the number one retirement mistake that Canadians are making is simply not saving enough. And as the data reveals, older Canadians are equally at fault.

If you want to avoid this mistake, you’ve come to the right place. Here’s one essential hack to ensure that you always meet your savings goals.

Make it automatic

If the toughest part of saving is doing the actual saving, your best investing hack is to automate everything. This practice takes advantage of classic psychological biases that treat opt-in and opt-out decisions differently. Here’s how it works.

If your goal is to save $300 per month, don’t trust yourself to login and manually deposit the funds. Instead, set up a recurring withdrawal to automatically move $300 from your savings or checking account to your brokerage account.

Nearly every brokerage firm offers this capability. Why is this so important? Decades of studies show that humans are much less likely to opt-out than opt-in.

Essentially this means that you’re more likely to stick with the status quo. So if the money is set to withdraw from your account anyway, you likely won’t take the time to prevent this investment from being made.

If you need to manually make the investment each month, however, you’re much less likely to follow through.

Setting up automatic, recurring investments is your single best tool to saving enough for retirement. But where should you invest the money?

Stick with Watsa

Prem Watsa is one of the best investors of the past 40 years. Since 1985, his shareholders have earned more than 17% annually. I’ve written about how I would never sell the three stocks that he manages: Fairfax Financial Holdings (TSX:FFH), Fairfax Africa Holdings (TSX:FAH.U), and Fairfax India Holdings (TSX:FIH.U).

By owning each stock above, you’ll create an instantly diversified portfolio with proven resiliency against downturns. Fairfax India and Fairfax Africa also give you exposure to some of the biggest growth opportunities this century, both of which should persist for decades to come.

Based on their respective track records, entrusting your money with Prem Watsa is similar to investing alongside Warren Buffett by purchasing Berkshire Hathaway Inc.

The advantage, however, is that Fairfax is 90% smaller than Berkshire Hathaway, meaning there’s significantly more runway for long-term gains.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool owns shares of Berkshire Hathaway (B shares) and has the following options: short January 2021 $200 puts on Berkshire Hathaway (B shares) and long January 2021 $200 calls on Berkshire Hathaway (B shares). Fool contributor Ryan Vanzo has no position in any stocks mentioned. Fairfax Financial is a recommendation of Stock Advisor Canada.

More on Bank Stocks

a man relaxes with his feet on a pile of books
Bank Stocks

1 Canadian Bank Stock That Smart Money Is Buying

A surging Big Bank stock is a smart buy for value and income investors in the second half of 2025.

Read more »

concept of real estate evaluation
Bank Stocks

1 Magnificent Canadian Financial Stock Down 15 Percent to Buy and Hold for Life

As traditional bank stocks surge higher, this non-prime lender is still catching up. And that’s exactly what makes it interesting…

Read more »

chart reflected in eyeglass lenses
Bank Stocks

Bank of Nova Scotia: Buy, Sell, or Hold in July 2025?

Bank of Nova Scotia is up 17% from the April low. Are more gains on the way?

Read more »

customer uses bank ATM
Bank Stocks

2 Top TSX Bank Stocks to Buy and Forget

Investing in TSX bank stocks such as EQB can help you generate outsized gains and beat the market over the…

Read more »

Investor wonders if it's safe to buy stocks now
Bank Stocks

National Bank of Canada: Buy, Sell, or Hold in July 2025?

This big bank stock is a sound option for income investors in July for its positive momentum and strong showing…

Read more »

Asset Management
Bank Stocks

Best Stock to Buy Right Now: Royal Bank of Canada vs Toronto-Dominion Bank?

Royal Bank and TD Bank are on a roll. Is one still undervalued?

Read more »

Canadian dollars in a magnifying glass
Bank Stocks

Bank of Nova Scotia: Buy, Sell, or Hold?

Bank of Nova Scotia is up more than 15% from the April pullback. Are more gains on the way?

Read more »

a man celebrates his good fortune with a disco ball and confetti
Bank Stocks

Where Will CIBC Be in 10 Years?

With strong earnings growth, rising dividends, and a clear leadership plan, CIBC could be one of the best bank stocks…

Read more »