My husband and I, both 40, feel like we’re falling behind on our retirement savings. We’ve got a total of $50K — how much should we have and what can we do besides maxing out our RRSPs?

If you’re like many hardworking Canadians, you’ve spent years faithfully contributing a portion of your paycheque to a Registered Retirement Savings Plan (RRSP), watching your retirement savings gradually grow. By the time you hit your 40s, it might feel like you’re on track to retire at a reasonable age.

But do you really have enough?

Since you and your spouse have only saved around $50,000, it sounds like you got a late start in investing after settling into your careers. You know you’re probably behind — and maxing out your contributions feels like the obvious next step.

Is there anything else you can do to supercharge your retirement savings?

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Let’s take a look at where your retirement savings should ideally be right now — and if you’re not quite there yet, how to catch up quickly.

How much should we have saved now?

As a general rule of thumb, by the time you reach your 40s, you should have around three times your annual salary saved in your RRSP. That’s not the reality for many Canadian workers. As of 2023, the median RRSP balance for an individual aged 35 to 44 was just $33,000, according to Statistics Canada.

Your 40s should be the years where retirement planning becomes a top financial priority — having six times your salary saved by age 50 is a common benchmark — but the idea of that can be anxiety-inducing if you already feel behind and have debt and other expenses to worry about.

The expenses of growing older — supporting children, paying for healthcare out of pocket, home maintenance and debt payments — may make you feel like there’s no chance to increase those retirement contributions and to make that RRSP creep up any faster.

As a good rule of thumb, try to pay down any immediate debts and set aside an emergency fund worth three to six months of expenses for any emergency bills. Paying your debts can free up funds for retirement, and setting aside money for surprise costs can keep you from having to cut back on account contributions.

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Maxed out your RRSP? Now what?

Luckily you don’t have to rely on just your RRSP to set yourself up for retirement.

In addition to your RRSP, consider opening up a Tax-Free Savings Account (TFSA), which has a maximum contribution limit of $7,000 for 2025.

It’s a very flexible, all-purpose savings tool that allows you to contribute and withdraw from a tax-sheltered account easily and without penalty. Moreover, when you retire and start pulling money out of your RRSP and TFSA accounts, the government considers your RRSP withdrawals when “clawing back” your Old Age Security (OAS). But this is not the case when withdrawing from TFSA, which is a big bonus.

Additionally, consider opening a high-interest savings account (HISA) to start stashing more cash away. HISAs offer percentage yields of 3% or more, meaning that your funds could benefit from some strong compound interest. These funds can be more accessible than other investment vehicles, so make sure that you keep it dedicated for additional retirement savings to avoid dipping into it unless necessary.

Should we max out our RRSP?

Contributing enough to your RRSP to get the full employer match, if your employer offers one, should be the bare minimum to avoid leaving free money on the table. But maxing out your contributions might be the next step to catching up your retirement.

Be sure to stay aware of current contribution limits: For 2025, employees can contribute up to $32,490, which has increased from the $31,560 allotted for 2024.

Also be sure to note taxes involved with RRSP contributions: You contribute your dollars pre-tax and these dollars are taxed when you make withdrawals in retirement. If you suspect you will retire in a lower tax-bracket (eg: will earn less in retirement) then maxing out an RRSP is the preferred option. If you think you’ll retire in a higher income bracket (eg: earn more in retirement from your investment earnings or other forms of income) then maxing out a TFSA and taking advantage of tax-free withdrawals might be the better move.

Sources

1. Statistics Canada: Assets and debts held by economic family type, by age group, Canada, provinces and selected census metropolitan areas, Survey of Financial Security (Oct 29, 2024)