If you’re in your 20s or 30s, retirement may be the least urgent item on a long and expensive financial to-do list.

Paying the rent or a mortgage comes first. There may be student loans or credit-card balances to pay off. You might be trying to build an emergency fund or save for a first home. Add higher grocery bills, and retirement can easily become a problem for your future self.

That feeling is understandable. Canadians aged 25 to 44 have recently reported high levels of financial stress. In the United States, younger adults are less likely than older adults to say they are financially comfortable.

But retirement planning should begin earlier than many people think. That doesn’t mean it should come first. Rather, retirement should be one part of a financial plan that changes with your age, income, debts and goals.

Three decisions matter especially: know what retirement benefits you have, put competing financial goals in a sensible order and build a long-term saving habit.

No one’s 20s and 30s look the same. You might be saving for a mortgage or just struggling to pay rent. You could be swiping dating apps, or trying to understand childcare. No matter your current challenges, our Quarter Life series has articles to share in the group chat, or just to remind you that you’re not alone.

Know what you’re working with
Retirement systems differ across countries, but the basic challenge is similar: workers need to understand which income sources will be available to them later in life.

In Canada, most people build retirement income from three sources: the Canada Pension Plan, employer pension plans and a registered retirement savings plan (RRSP) or tax-free savings account (TFSA).

The Canada Pension Plan is mandatory: you contribute just under six per cent of your income, matched by your employer. Check your contribution statement through your My Service Canada Account to see how much you are on track to receive.

Today’s younger workers will also benefit from the enhanced Canada Pension Plan, which is gradually increasing the share of average work earnings it replaces in retirement from about one quarter (25 per cent) to one third (33 per cent). The increase will depend on how much and how long a person contributes under the enhanced system.

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