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Start retirement plan early, says Gail Vaz-Oxlade

Gail Vaz-Oxlade was in her 20s when she first started funnelling funds into a retirement savings plan, but not because she wanted to save money for her golden years.

"I wanted a fur coat," the longtime financial writer and TV host said candidly. "That's why I started contributing to an RSP."

"I could not justify buying a fur coat on my income."

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Ms. Vaz-Oxlade said she waited for her tax refund to make the first deposit, and finished paying off the coat on layaway the following year. She used the same strategy to buy her first car.

"That way, I was getting what I wanted, my savings were getting what it wanted, and I did this for years and years and years," she recalled.

Ms. Vaz-Oxlade eventually gave the coat to a friend who was moving north and had the car for about three years.

"It was very very, third-hand," she recalled, laughing.

"But that's the other thing. If you put all your stock in bright and shiny, you're never going to have any money for anything else, because so many people put bright and shiny before solid and secure. I'm the solid and secure girl."

Viewers of Slice's "Til Debt Do Us Part" and "Princess" know host Ms. Vaz-Oxlade pulls no punches when it comes to dispensing tough love to debt-ridden individuals and families, many of whom are spending and living well beyond their financial means.

The personal finance guru is bringing her no-nonsense approach to her latest book "Never Too Late" (HarperCollins) where she offers guidance to those ready for retirement planning but unsure of how to get started.

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Ms. Vaz-Oxlade has written 13 books on personal finance. But the author, who previously penned "The Retirement Answer Book," admits she was initially reluctant to write another one about retirement planning.

Ms. Vaz-Oxlade said her editor read "a rant blog" she had written on the topic and said that's what her book should be about - sharing the truth about retirement planning and helping individuals find their own way.Ms. Vaz-Oxlade recalled writing the blog after reading a series of retirement articles which led her to a financial calculator. She punched in her numbers and was told she wouldn't have enough to make the transition.

"I said, `You know what? I'm so fricking sick of this,"' she recalled. "'I'm so sick of you telling me I'm going to fail right off the top, so why would I even bother? Why would I bother to save my $25, my $100, my $250 if you're telling me it's not going to be enough, and I might as well go to Florida now?"' Ms. Vaz-Oxlade said one of the fallouts of telling people they need "a bazillion dollars for the future" is that it can cause them to avoid dealing with retirement planning.

Some make excuses that they'll get to it eventually, or tell themselves since there's no likelihood they'll reach the goal to retire comfortably, they'll reconcile themselves to have "a crappy retirement" but a great life now, she said.

"What I'm saying is you can't do that," said Ms. Vaz-Oxlade. "You can't abdicate responsibility for yourself in the future because it's your future, and so you need to own it."

Key to that is finding the balance between satisfying your needs and wants now and ensuring you have enough put aside for the future, she said.

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So where can people who want to put away money but may be living day-to-day find the cash they need to save?

Ms. Vaz-Oxlade said when people are made to pay attention to where they're spending their money, it changes their consuming habits.

One of the things she does on "Til Debt Do Us Part" is cut variable spending, giving people between 20 and 40 per cent of what they used to have. They still have money in their jars because they're paying attention, she said.

Ms. Vaz-Oxlade said individuals should want to hit a target that's going to get them to where they need to be. That starts with figuring out their present net worth, what it should be relative to their income and age, and what they need to do to close the gap.

If someone is carrying a debtload but still wants to invest, Ms. Vaz-Oxlade recommends the person start saving as there will always be an excuse for why the time isn't right. She suggests selecting a dollar amount they can afford to put away.

"If it's $50 a month, you start right now with $50 a month," she said. "Then you go through your budget and look for ways to trim so you can up that $50."

Once you've got a certain amount of your debt paid off, you can take some of the money going towards debt repayment and put it towards growing your RSP and emergency fund, she noted.

Ms. Vaz-Oxlade realizes it can be scary for those who haven't socked away enough with retirement looming.

"That's the reason for the book, `Never Too Late,' because ultimately we have control over various aspects of our life, including when we choose to retire," she said.

For example, if you're 50 and are thinking you want to retire at 55 but have no savings, unless you're prepared to live on what the government gives you, you can't do it, she said. But if you are prepared to wait until you're 70, you now have 20 years to grow your money, she added.

"That's a lot of growth to achieve," she said. Forty (years) is better - 20 can be done."

When it comes to investing, Ms. Vaz-Oxlade said the single best option is an RSP, but not necessarily one that works for everyone.

If you've never put money in an RSP and are starting to save in your 50s, you don't have gobs of money or time to grow the money in such a plan. In that instance, a tax-free savings account might be a better option, she said.

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