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  • Writer's pictureThomas Poff, CFA

Midlife Financial Awakening: Retirement Planning in Your 40s

Chances are, if you’re in your 40s, you probably haven’t spent a lot of time thinking about retirement planning. After all, there’s a lot going on in life, whether its family, a job, dealing with debt, or other priorities. You’re not alone.

A recent survey found that more than half of Canadians (52%) say they are not prepared for retirement. The biggest reasons? There isn’t enough money left at the end of the month for savings.

As a result, an equally high number of Canadians (50%) don’t think they’ll be able to fully retire at 65 and instead, will have to have a “gig job” when they hit retirement age to make ends meet. Meanwhile, 36% of Canadians aged 18 to 54 don’t think they’ll ever be able to retire.

That sounds pretty dire. But the good news for Canadians in their 40s is, it’s never too late to start planning for retirement. In fact, regardless of where you’re at financially, the retirement financial advisors at Sharp Asset Management can help.

How Do I Start Saving for Retirement?

There is no one-size-fits-all approach to retirement planning for Canadians in their 40s. That said, it’s important to have a comprehensive understanding of your options when it comes to developing a retirement plan that meets your unique goals.

First, you have to ask yourself some retirement related questions.

  • What do I want my life to look like when I retire?

  • Will I be married or have a partner?

  • Where will I live?

  • What will I do or what would I like to do?

In other words, you need to determine what your expenses will be during retirement, how long you need to plan for, and the return on savings in retirement. With retirement still 20+ years away, these can be difficult questions to ask, but a lot can happen between now and retirement.

Because a lot can happen over the coming decades, it’s important to have a flexible retirement plan; one that can change and adapt to the unexpected. Planning for retirement and finding ways to save now will give you a big head start. A portfolio manager can help you get started.

What Are Some Tax Friendly Retirement Savings Plans?


A retirement financial advisor near you will highlight two of the most popular tax-friendly retirement savings plans: RRSPs and TFSAs. An RRSP is a registered retirement savings plan (RRSP) that holds your savings and investment for retirement.

Contributions to your RRSP are deducted from your taxable income, and, if invested, grows tax-free. You eventually get taxed on RRSP withdrawals when you retire, but by then, your tax bracket will be lower than it is today. Contributing to an RRSP today can also help reduce your tax burden, since the pre-tax contribution lowers your current income level.

For the 2023 tax year, the RRSP contribution limit increased to $30,780 and Canadians can contribute up to 18% of their income.


Another great way to plan for retirement when you’re in your 40s is with a Tax Free Savings Account, or TFSA. Through a TFSA you contribute after-tax income into this special savings account.

What makes a TFSA so special is that the income generated in this account, whether its through dividends, or gains made on the stock market, is entirely tax free. If you invest $5,000 in a stock and make $20,000 when you sell, you get to keep that money, tax free. There is a cavate, because contributions are with after-tax dollars, you cannot claim any losses to reduce your income tax.

A TFSA has an annual contribution limit. While RRSP contributions are tied to income, the annual contribution limit with a TFSA is the same for all Canadians. Because it’s indexed to inflation, the limit can change annually, though.

In 2023, the contribution limit was raised to $6,500. If you open a TFSA this year or have one but have not contributed in a while, you can deposit a total of $88,000. Any unused TFSA contribution from previous years rolls forward.

What Are Employer Sponsored Retirement Plans?

Employer sponsored retirement plans provide you with additional income during your retirement. There are a number of different employer sponsored retirement plans and we’re going to look at two of the most popular: Group Registered Retirement Savings Plans and Defined Contribution Plans.

Group RRSP

A group RRSP is a retirement savings plan that is sponsored by your employer. You open an individual RRSP but the funds are contributed by your employer. The contributions are made through regular deduction from your pay. In many instances, an employer will match the contribution up to a certain amount. The amount will vary by employer, but most will match between 50% to 100% of your contributions.

Defined Contribution Plans

Through a defined contribution plan (DCP) you contribute a certain amount, but you do not know how much you will get when you retire. In most cases you and the employer pay a defined amount into the DCP each year.

While a DCP sounds similar to a group RRSP, there are some big differences. With a group RRSP you can access the money whenever you want. With a DCP, you cannot access the funds until you retire. You may be able to lower the contribution amount, but otherwise, you’re locked in. A registered retirement financial planner can help you decide how to manage and invest the money in your DCP.

Sharp Asset Management for Your Retirement Planning Needs

Half of Canadians have not started to think about retirement planning. It’s not because they don’t want to. Fifty-five percent of Canadians say they need to better understand their retirement planning options. That’s where the registered wealth management professionals at Sharp Asset Management Inc. can help.

Sharp Asset Management is an independent wealth management firm that is 100% owner operated. We are not affiliated with any financial institution, securities firm or mutual fund company. As a result, our investment decisions are unbiased. Nor do we earn any commissions or fees on investments we choose on behalf of our clients.

All of our investment counsellors are charter financial analysts, the highest level of achievement, and have over 10 years of experiencing managing portfolios. To learn more about investing with Sharp Asset Management, contact us today.

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