IAM Pension

The sooner you start saving for retirement, the better! One of the most valuable tools for building a secure future is a workplace pension plan. In Ontario, the third Thursday of February is now Pension Awareness Day; a perfect reminder to check if your company or union offers a pension plan.

Not sure if they do? Ask your employer or union.

Here are five key benefits of contributing to your pension plan as early as possible:

1. More Time to Contribute

• Defined Benefit (DB) Plans: Your retirement benefit is based on a formula considering salary and years of service. The longer you’re a member, the larger your benefit.
• Defined Contribution (DC) Plans: Contributions you make, often matched by your employer, grow over time. Starting early means smaller contributions can still help you reach your retirement goals.
• Even small amounts count! Contributing just $25 per paycheck can grow significantly over time—and you can increase contributions as your salary grows.

2. Harness the Power of Compound Growth

Time is your greatest ally. The longer your money is invested, the more it grows through compounding. For example, contributing $250/month and retiring at age 65 could look like this:

• Start at 25 (40 years): $479,264
• Start at 35 (30 years): $251,121
• Start at 45 (20 years): $116,463

Starting early can mean more than double the savings compared to starting a decade later!

3. Opportunity to Save on Taxes

• Contributions to a pension plan are tax-deductible, reducing your taxable income for the year.
• The sooner you start, the more you can save in taxes while growing your retirement fund.

4. Advantage of Payroll Deductions

• Automatic payroll deductions make saving effortless.
• Contributions are deducted before you even see the money and are made with pre-tax dollars, helping you stick to your savings routine.

5. Increased Financial Security

• Starting early means a longer contribution or accrual period, resulting in a larger pension and greater financial security in retirement.
• Delaying contributions means you’ll need to save more later to reach the same goal.

The Key to a Successful Retirement

Planning and saving early is crucial. A pension plan allows your money to grow, giving you the financial freedom you deserve when you retire.

Remember: It’s never too early—or too late—to join a pension plan.