I have a recurring dream. It comes to me when I am slumped at my desk, giving the clock my best Svengali stare, willing the hour hand to move faster. In this dream, I kiss my wife goodbye as she leaves for work and I, pyjama-clad, return to a large plate of waffles that awaits me in the kitchen. My schedule is free and clear, showing only a date with the newspaper and maybe a tee time on the horizon. Perhaps I will learn to play bocce.
Normally, I snap out of it. I'm 32 years old. I have a home to pay off, a car to fix, and a year-old daughter who one day will want to wear shoes. Retirement, I tell myself, is reserved for those who have worked long and hard. But not today. This is the day I resolve to realize my dreams. I have just over $9,000 in RSP savings. It's not a lot, but I can't help thinking that, with a bit of financial wizardry, I could cultivate a small fortune. It's time to make my money work for me.
I'm actually in a better position for retirement than many of my peers. At least I've started saving. A poll conducted for the Royal Bank of Canada in late October of last year found that 32% of Canadians have yet to even begin tucking away funds for retirement (compared with 24% the year before). The same survey found that a mere 35% of Canadians had contributed, or planned to contribute, to an RSP for the 2009 tax year, the lowest percentage of contributors in more than a decade. "As a whole, Canadians have undersaved for their retirement," Tina Di Vito, the director of retirement strategies at BMO Financial, tells me. The word "understatement" comes to mind.
Even more depressing is the fact that a large number of those ill-prepared Canadians are running out of time. Among the respondents 55 and older, almost half admitted they had yet to start planning for retirement. Even supposing they managed to tuck away $50,000, that will only grow to about $105,000 by the time they hit 65, assuming an 8% rate of return. If these folks have any hope of hanging up their hats any time soon, they have little choice but to take whatever they've got now and swing for the fences.
To which I say, why wait until I'm 55 to make my big move? I could make my Hail Mary pass today and, if I'm successful, I could be signing up for aquafit classes tomorrow. I hereby resolve to turn my $9,000 into $750,000, a figure the retirement calculators tell me should translate into an annual income of around $40,000. The challenge? I want to do it in fewer than 10 years, before my daughter even starts Grade 5.
Like many Canadians, I turn to my local bank branch for answers to my most pressing financial questions: Can I start a Registered Education Savings Plan for my daughter? Can I please get a credit card with a lower interest rate? Are those calendars free? I make an appointment to see the manager, a very professional woman who welcomes me into her spare office with a warm smile. It's a tiny space with a potted fern and one of those posters of an eagle with a quote about inspiration or courage. I can't remember which.
"What can I help you with?" she asks.
Here goes. I explain my plan and ask her what I should do with my nine grand in retirement savings so that in 10 years it will have grown to $750,000?
Did I just make the funniest joke in the world, or was it merely the best zinger ever heard in this branch of one of Canada's big banks? Either way, the manager laughs so heartily, she has to put one hand over her stomach to contain herself. I remain stone-faced.
. Weigh in on whether you would stash some extra money into an RRSP, RESP or a TFSA.