If you're in your 20s or 30s, retirement probably seems decades away, so it's easy to put off planning for it. That being said, the earlier you start saving, even if in small amounts, the better prepared you will be to retire.
You have time on your side
When you are starting out in life, it's easy to understand why saving for retirement isn't front of mind. You leave school and enter the workforce, where you might be paying off student loans and starting at a lower salary. Then, as you advance in your career, other expenses, like cars, buying a home, and starting a family, can enter the picture and become a priority.
Before you know it, retirement isn't too far away, and you start planning and saving, hoping to get your nest-egg to a comfortable amount. The problem with this approach is that you miss out on the advantage of compound interest and long-term investment growth.
Consider someone who starts saving $200 a month when they are 25 years old. Assuming a 7% annual rate of return, they would have $553,000 saved by the age of 65. If someone were to start saving the same amount every month ten years later at age 35, they would only accumulate $264,000 - that's a big difference!
To help realize the benefit of starting early, you should consider investing your savings within tax advantaged accounts like RRSPs and TFSAs. You can also use free online financial planning tools like Frame to optimize your monthly savings plan.
You don't want to take on more risk closer to retirement
If you postpone saving for retirement you might need to take on riskier investments later in life to 'catch up.' If the market has a downturn, you could find yourself loosing a large part of your nest-egg and potentially having to delay retirement.
You don't want to depend on government money
During your working years you pay into the Canadian Pension Plan (CPP), so you should expect it to pay out in retirement. While it's not likely that the CPP would entirely disappear, the wave of baby boomers entering retirement will definitely put a strain on this pension fund.
Additionally, assuming that CPP and Old Age Security (OAS) are available to you, the maximum payout from CPP today is $13,855 per year; not bad, but probably not enough to live comfortably. If you get full OAS payments you can expect to add $7,217 to that CPP amount, but it's still not enough to support most Canadians.
As you age, you may have additional medical and assisted living costs that eat into any income you receive from government plans. With evolving medical advancements, there is also a possibility that you will live longer than those from past generations, meaning that your retirement savings will have to last longer than you might expect.
As you can see, there are a few reasons why the best time to start planning and saving for retirement is now.