Here's the Average RRSP Balance at 45 in Canada

Here’s the Average RRSP Balance at 45 in Canada

The RRSP is a strong tool for investors, but only if you invest in top stocks like this ETF for long-term rewards.

Amy Legate-Wolfe

Author Bio

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband.

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“October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published November 25, 2024 4:30 pm EST

At 45, many Canadians are in the thick of retirement planning, with some catching up and others on track. According to recent data, individuals aged 35 to 44 have an average Registered Retirement Savings Plan (RRSP) balance of $49,014, making up 47% of their total retirement savings of $104,159.

For those in their mid-40s, this figure might provide a useful benchmark. Yet whether it’s sufficient hinges on personal retirement goals, desired lifestyle, and other income streams. Experts often recommend having about four times your annual salary saved by age 50. This suggests that at 45, you’d ideally be nearing three times your annual income in total savings.

Silver coins fall into a piggy bank. — Source: Getty Images

Falling short

The reality, though, is that many Canadians find themselves falling short of these guidelines. Life happens, with mortgages, childcare costs, or unexpected expenses limiting how much you can tuck away. If your RRSP balance isn’t where you’d like it to be, there’s good news. You still have time to catch up. Increasing your contributions, utilizing unused RRSP room, and selecting the right investments can make a big difference. Diversification is key here, as it spreads risk while optimizing returns.

Enter Vanguard FTSE Global All Cap ex Canada Index ETF (TSX: VXC), a fantastic option for those looking to supercharge their RRSP investments. VXC offers exposure to a wide range of international equities. Effectively diversifying your portfolio beyond Canada. This exchange-traded fund’s (ETF) top holdings include Vanguard Large Cap Index Fund (58.17%), Vanguard FTSE Developed All Cap ex North America Index ETF (24.80%), and Vanguard Emerging Markets Stock Index Fund (10.16%). The result? Access to the world’s top markets and opportunities for growth.

Recent growth

Let’s talk performance. VXC boasts a stellar year-to-date return of 24.80% and a one-year return of 35.07% as of writing. These figures reflect its exposure to global equities, which have benefited from recovering markets, technological innovation, and robust corporate earnings. The fund is heavily weighted toward technology (24.96%), financial services (15.41%), and industrials (10.98%). Sectors that often outperform during periods of economic expansion.

Its recent performance speaks volumes, but what about the future? VXC’s global diversification means it’s well-positioned to weather market fluctuations while capturing growth from various regions. That said, investing in international equities does come with risks, including currency volatility and geopolitical uncertainty. However, these risks are often offset by the broader growth potential offered by emerging and developed markets alike.

Looking ahead

For the long-term investor, VXC’s low management fees and high exposure to global innovation make it a solid choice. Suppose your RRSP is currently concentrated in Canadian stocks or fixed-income securities. Adding VXC can balance out your portfolio and introduce significant growth potential. Its holdings span everything from large-cap U.S. stocks to small-cap emerging market players, ensuring you’re not putting all your eggs in one regional basket.

Still, catching up on your RRSP contributions means more than just picking the right investments. It’s also about maximizing your tax advantages. Every dollar contributed to your RRSP lowers your taxable income, giving you an immediate financial boost while helping you save for the future. Pair this with a strategic investment like VXC, and you’re setting yourself up for growth over the coming decades.

Bottom line

If you’re worried about not having enough saved, don’t panic. Start by calculating how much you need annually in retirement and work backward to determine how much you should save each year moving forward. Tools like contribution calculators and guidance from financial advisors can simplify the process. Even if you can’t max out your RRSP every year, consistently contributing what you can and investing wisely will compound into meaningful growth over time.

In short, while the average RRSP balance at age 45 provides a decent yardstick, it’s more important to focus on where you want to go from here. With options like VXC in your investment toolkit, you can diversify globally, enhance growth potential, and catch up to ensure a comfortable and secure retirement.