Here’s the Average RRSP Balance at Age 34 for Canadians

The RRSP is a perfect tool for creating retirement income, but only if you contribute! Here’s how to catch up.

| More on:
A worker uses a laptop inside a restaurant.

Source: Getty Images

At 34, Canadians often find themselves in the thick of life’s most demanding years. Careers are progressing, perhaps families are growing, and the question of whether retirement savings are on track becomes increasingly relevant.

It’s an exciting age full of possibilities but also one where financial planning can sometimes feel overwhelming. One of the most important tools for building long-term wealth in Canada is the Registered Retirement Savings Plan (RRSP). This provides tax advantages designed to encourage consistent saving for retirement. So, how much is enough?

The average

For Canadians aged 34, the average RRSP balance is approximately $57,500. This figure is encouraging and shows that many young adults are taking their retirement savings seriously. However, whether this amount is “enough” depends on several factors.

Retirement savings goals vary widely depending on the lifestyle one envisions, expected expenses, and health considerations in retirement. Some financial experts recommend aiming for savings that will allow you to replace 70-80% of your pre-retirement income. Using that benchmark, it’s clear that while $57,500 is a great start, it likely won’t get you across the finish line by itself.

It’s also worth considering that compounding returns can work wonders over time. Even modest contributions now can grow substantially by the time you’re ready to retire. That said, if your RRSP balance feels low, don’t despair. It’s not too late to catch up. One effective way to turbocharge your savings is by investing in dividend-focused exchange-traded funds (ETFs).

VDY ETF

An ETF like Vanguard FTSE Canadian High Dividend Yield Index ETF (TSX:VDY) is a strong option. Dividend ETFs like VDY offer a dual benefit. Regular income through dividends and potential capital appreciation from the underlying stock performance.

VDY, specifically, focuses on high-dividend-paying Canadian companies, making it an appealing choice for investors looking to grow their RRSP balance. As of writing, VDY has delivered a stellar year-to-date return of 22%. This strong performance reflects the strength of its holdings, which include top-tier Canadian companies across sectors like financials, energy, and utilities. These industries are often known for stability and reliable dividend payouts, making them a cornerstone of many retirement portfolios.

The future outlook for VDY remains bright. Canadian dividend-paying companies are well-positioned to thrive, even amid economic uncertainties. These businesses often generate strong cash flows, enabling them to continue paying dividends even during challenging times. With Canada’s economic resilience and the strategic importance of its energy and financial sectors, VDY offers a compelling case for long-term growth.

Catching up

If you’re behind on your savings or want to boost your current strategy, automating your RRSP contributions is an excellent first step. Consistent, automated investments help you stay disciplined and take advantage of dollar-cost averaging. This can smooth out the impact of market volatility over time. That means that whether markets are up or down, your regular contributions buy more shares when prices are low and fewer when prices are high — ultimately optimizing your investment costs.

Reinvesting the dividends you receive from VDY is another smart strategy. Many brokerage platforms offer dividend-reinvestment plans (DRIPs), which use your dividend payouts to purchase additional shares automatically. Over time, this reinvestment can compound your returns significantly. Imagine the difference 20 or 30 years of compounded growth could make. It’s the type of magic that turns modest beginnings into substantial retirement savings.

Bottom line

For those wondering whether they’re too late to start or catch up, remember this: time in the market beats timing the market. Starting now, even with small contributions, can have a profound impact on your future financial security. Think of your RRSP as a long-term partner in your financial journey — one that rewards patience, discipline, and a well-thought-out strategy.

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.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

woman analyze data
Dividend Stocks

Secure Dividends: How to Turn $10,000 Into Reliable Passive Income

Earn a secure dividend income of over $150 every quarter by investing in these reliable Canadian dividend stocks.

Read more »

top TSX stocks to buy
Dividend Stocks

Buy the Dip: This Top TSX Dividend Stock Just Became a Must-Own

This retail dividend stock is a Canadian legend, allowing investors to get in on some serious action with a strong…

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

How to Build a $1 Million TFSA Starting With Just $10,000

Two established, high-yield dividend stocks can help turn a small seed capital into a million-dollar TFSA.

Read more »

money cash dividends
Dividend Stocks

Here’s How Many Shares of FIE You Should Own to Get $500 in Monthly Dividends

This monthly-paying dividend ETF is simple to understand.

Read more »

sale discount best price
Dividend Stocks

Is This Correction Your Chance? Top 5 Canadian Dividend Stocks on Sale

For value, income, and long-term growth, check out these top five dividend stocks.

Read more »

Stethoscope with dollar shaped cord
Dividend Stocks

Canadian Investors: Buy WELL Health Stock Right Now

WELL Health (TSX:WELL) stock might be on the downturn right now, but a bargain for value-seeking investors for their self-directed…

Read more »

A worker gives a business presentation.
Dividend Stocks

3 No-Brainer Canadian Stocks to Buy Under $70

Investing in stocks need not require you to burn a hole in your pocket. You can invest $70 to $100…

Read more »

View of high rise corporate buildings in the financial district of Toronto, Canada
Dividend Stocks

Canadian Real Estate Stocks Plummet: Is it Time to Sell or Buy?

Real estate stocks have a lot going for the, especially dividends. But are they all a buy or due to…

Read more »