If you've just finished university and are about to start your first job, figuring out how to start saving for your retirement probably isn't high up on your to-do list, (far below bigger concerns like celebrating your graduation, going on a well-deserved vacation, or [the often dreaded] grad school applications). So, if you're worried that your piggy bank is feeling a little bit empty just after graduation'don't.

An article in the Investment Executive notes, 80 per cent of Canadians aged 18 to 34 do not feel confident that they will be able to save for retirement, according to a study conducted by BMO Financial Group. While the numbers seem alarming, Kareim Abbouda, a consultant for Investors Group Financial Services Inc, doesn't think people who haven't started to contribute to an RRSP need to panic. Depending on your financial situation, setting up and contributing to an RRSP doesn't necessarily have a ÔÇÿbest before' date. I've seen people in their mid-forties, and they've never contributed to an RRSP, he says.

Phillip Nelson, a financial planner at the Bank of Montreal, agrees. New grads should weigh the benefit of starting an RRSP right away versus quickly paying down their student debt, while an article in the Globe and Mail suggests doing the latter first. New graduates, (as well as everyone else), have many financial obligations, and it's important to keep in mind that as a newly graduated person, you don't have to try and fulfil all your financial duties at once.

Experts say that it may be unrealistic to save money in an RRSP while paying down student debt, a monthly rent or mortgage, as well as other bills. So, they suggest taking care of your more immediate financial obligations like student debts; once you've begun to make more money, start to contribute to an RRSP. By that time, even if you still haven't started to contribute to an RRSP, you should still have plenty of time to catch up and enjoy a comfortable retirement, writes Josh O'Kane in an article for the Globe and Mail.

One way students and new graduates can save money before they're financially capable of contributing to an RRSP is with a TFSA (tax-free savings account), which is an absolutely tremendous vehicle for saving, says Andrew Dedousis, a senior wealth advisor at Meridian. If your income is lower, something that could work really well is to take advantage of the tax-free savings account.

There are many differing opinions on the matter of when or how to start saving for your future and retirement'once you've factored in your individual financial situation, things can get quite confusing. What seems to be the most obvious strategy is to try and save your money in any way that you can, whether it be through a TFSA or an RRSP, depending on your income bracket. For example, Abbouda says, If [a student] is going to be a teacher, and [they] know that over the next few years it's going to be a stable income but it's not necessarily going to grow very much from now to five years' time, this would be an opportune time for him to start looking at an RRSP. However, that may not be the case for every industry. Lawyers, who typically make more of an annual income than teachers, also usually have a larger amount of student debt. Abbouda suggests that these students focus on paying back their student loans. One of the reasons for that is if he's starting out [with a salary] at, say $60,000, he is probably going to be making well over $100,000ÔÇô200,000 over the next 10 years. So it's best for him to contribute to an RRSP when reducing taxable income makes more sense than at a lower income bracket.

The unanimous opinion, though, is that no matter what you're doing, you should always try and speak to someone at your bank. Abbouda has seen many students, still struggling to pay off their debts, and it all comes back to the attitude that they might have had the wrong advice, or no advice in the beginning.

Discussion

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