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retirement timeline

Ask your average 22-year-old how she feels about contributing to an RRSP and she'll have a different take on it than someone pushing 52. And why not? For someone sitting on a $30,000 student loan and trying to land that first all-important job, saving for retirement would seem as important as weighing the pros and cons of bifocals.

Although the mechanics of investing in registered retirement savings plans (RRSP) is the same for both groups – everyone has until March 1 to put money into a registered investment if they want to get a tax break on last year's income – the plan's importance grows as retirement draws closer. Or perhaps it just seems that way. In reality, each decade offers important strategies – and challenges to overcome – on the road to reaching the golden RRIF years.

In your 20s: Just do it

Between debts and paying the rent, will there be much money to invest at this stage? Probably not, but the 20s can be the decade to develop good saving habits, says Christopher Dewdney, a financial adviser with DWL Financial Services Inc. in Toronto who sits on the board at Advocis, an industry association. He recommends dollar cost averaging, investing weekly or monthly, rather than trying to throw a chunk of change at the RRSP before the deadline.

The portfolio, even if rather meagre, should also be aggressive, with about 25-per-cent fixed income (think low-risk government or corporate bonds) and 75-per-cent equity. Although his younger clients might want to jump into resources, precious metals or technology, Mr. Dewdney says he tries to keep them grounded.

"I have to harp on them not to forget the fundamentals and the large-cap blue chips like the banks. They're not as exciting as Facebook or Apple, but historically they do provide stable dividend growth and share price appreciation," he says.

Try this: Got a raise or bonus at work? Don't run out and buy a new car or cruise right away. Instead, take 50 per cent and throw it at your RRSP savings. Use the other half of the money for purchases.

In your 30s: Hold on tight

You thought the 20s were tough on the pocketbook? Welcome to the most costly stage of your life. From mortgages to daycare expenses, you might find yourself struggling. Still, this is not the time to stop paying into your RRSP, cautions Mr. Dewdney. But here's the good news: Being too busy to track your investment can be a positive thing. You won't be tempted to pull out when it's down, one major gaffe many long-term investors make. Instead, staying the course takes advantage of possible future lucrative upswings.

"We're not traders here. We're really looking at long-term capital appreciation," he says.

Try this: If you're planning on dipping into your RRSP to build a down payment for your first home soon, consider a more conservative, less risky portfolio at this point. You can always go back to an aggressive one later.

In your 40s: Almost there

For the first time, retirement no longer seems like a distant goal. Although you may still feel tapped out – mortgages to pay for, growing children to care for and aging parents to consider – it pays to take a good, hard look at what's happening with the RRSP. This is often the decade that clients want to do a detailed analysis of their portfolio, says Mr. Dewdney. The asset mix will probably still sit at about 30-per-cent fixed income and 70-per-cent equity, but the quality of the assets may change with movement away from volatile holdings and into banks, insurance and consumer staples.

Try this: Want to save more, but not convinced you can afford it? James Rankin, a financial adviser with Edward Jones in Guelph, Ont., recommends coming up with a short-term, but sizable goal to work toward right now. Think a trip to Europe. Once you've saved enough for the vacation and filled up on tapas in Barcelona, come back and take stock. "Clients discover they've been wasting a lot of money all along," he explains. "They can save more than they realize."

In your 50s: Save big

Finally. The house is paid off (or nearly), the kids are flying the coop and your pay is as high as you've ever seen it. You must have hit your 50s. For a lot of people, this is the time to dig in and invest that extra money into the RRSP. With your time horizon getting shorter though, it's also time to rethink your portfolio's allocation. Increase contributions, decrease risk. Both tactics work hand in hand.

"There's a reduction in risk, but that's typically offset by the chunk of change people are able to dunk into their account," Mr. Dewdney says.

Try this: Take stock of your stock.

It's actually possible to have too much money invested in an RRSP, cautions Harley Lockhart, a certified financial planner and senior adviser at Quail Ridge Financial Services in Kelowna, B.C., particularly if you're a lower-income earner or have a generous pension coming. A large RRSP could result in your funds being heavily taxed upon retirement. It might be more prudent to max out your TFSA instead now. "Sometimes it's better to pay tax than it is to defer it," he says.

In your 60s: Transition time

Hello risk cliff. This is the time most RRSP investors pull right back on equity and preserve what they've got. Still, it's important not to get too carried away, Mr. Rankin says.

Depending on your reliance rate – how much you're relying on that RRSP money after retirement – you might be just fine sticking with a larger portion of equity investments than is usual at this stage. "The reality is that the people who have more money and spend less can afford for the portfolio to be more aggressive," he says.

Try this: Ready to retire? Take a vacation. Buy that boat. Just don't sabotage all your hard work by racking up a credit card bill. Being smart with money never grows old.

Sure, you can invest $400 a month in your registered retirement savings plan (RRSP), but if you're also routinely throwing $800 at debt, it's time to rethink your finance strategy. James Rankin, a financial adviser with Edward Jones in Guelph, Ont., says too many people fritter their paycheques away on small purchases rather than thinking about long-term goals. "The problem with retirement is that it's so far out there and it's such delayed gratification, it's hard to get people focused on it. They say, 'Oh, I'll get caught up later,'" he says. Here are three ways to keep your eye on the prize:

Now and then

Be honest about how much you can actually save right now.

There's no point clearing out your bank account each month to put money in your RRSP if it means pulling out a high-interest credit card to pay for groceries. Slow and steady wins the race.

That bonus is not free money.

And neither is your raise. Always save 50 per cent for your future and use the rest to pay for lifestyle expenses in the here and now.

Don't buy stuff to achieve happiness.

A lot of retirees' money woes can be traced back to misguided spending over the years. "If I'm about to make a purchase, I hold it up and say, 'Is this going to be landfill in a few years?' " Mr. Rankin asks. "If the answer is yes, why am I buying it?"