Christopher Liew: The wrong ways to save for retirement

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Christopher Liew is a CFP®, CFA Charterholder and former financial advisor. He writes personal finance tips for thousands of daily Canadian readers at Blueprint Financial.

Most Canadians I talk to are doing the hard part right. They save every month and resist the urge to splurge. But plenty of disciplined savers still sabotage themselves, not by saving too little, but by saving the wrong way: the account, the mix, the fees.

Over several decades, those quiet structural choices don’t cost you a little. They compound into a lot. Below, I’ll walk through five of the most common mistakes, and the simple fixes.

1. You’re using the wrong account for your situation

For years, the retirement savings debate in Canada was just RRSP versus TFSA. That framing is out of date now, and sticking to it might be costing you.

If you haven’t bought a home yet, the First Home Savings Account often beats both. You can contribute up to $8,000 a year to a lifetime maximum of $40,000, you get the RRSP-style deduction going in, and qualifying withdrawals come out completely tax-free. That combination doesn’t exist anywhere else.

Another common mistake is defaulting to the RRSP without asking whether it actually fits. I see it often: a lower earner chasing a tax deduction that barely moves the needle at their bracket, when a TFSA would serve them far better.

2. You’re wasting your RRSP refund

The RRSP works like a charm. Where I see people slip is what they do with the payoff.

Here’s how it’s ideally supposed to work: you contribute, you get a tax refund, and you reinvest that refund. That second step is the whole point. The refund isn’t a bonus to spend, it’s part of your contribution coming back so you can put it to work too.

But a refund lands like a windfall, so it’s easy to let it fund a vacation or a dinner out. Treat yourself all you like, just know that doing so means you’re getting far less out of the account than you could. You got the deduction, then handed the reward back to your lifestyle instead of your future.

The fix is simple. When the refund lands, send it straight back into your RRSP or TFSA before you can talk yourself out of it. Or better yet, skip the refund entirely. If you contribute through a group RRSP at work, the tax break is already baked into every cheque. If you contribute on your own, you can file a T1213 form to have the CRA reduce the tax withheld from your pay, so you get the benefit all year instead of waiting for a lump sum you might spend.

This is also where some readers ask whether retiring outside Canada changes the retirement math. It can, a lot. I compared how the U.S. and Canada actually stack up in a recent video if that’s on your radar.

3. Your investment mix doesn’t match your timeline

Saving is only half the job. How that money is invested decides what it actually grows into, and this is where I see two opposite mistakes.

Young savers who park everything in cash or GICs because the market feels scary give up decades of growth they can’t get back. Time is the one real advantage they have, and they’re wasting it.

At the other end, people five years from retirement sometimes stay aggressive far too long, then take a market hit right as they’re about to start withdrawing. That’s the worst possible moment for a big drop. It’s one of the regrets I hear most from retirees. In general, your asset mix should get gradually more conservative as you age. If you set it once a decade ago and never looked again, it probably doesn’t fit you anymore.

4. You’re leaving free money on the table

If your employer offers to match your retirement contributions and you’re not capturing the full match, stop reading and go fix that today. I’m not exaggerating.

An employer match is the closest thing to free money you’ll ever find. If your company adds 50 cents for every dollar you contribute up to a limit, that’s an instant 50 per cent return before your investments earn a single cent. No stock picker on earth reliably beats that.

Yet people leave it unclaimed all the time, usually because signing up felt like paperwork they’d get to later. Couples miss other easy wins too, like spousal RRSP contributions that shift income to the lower-earning partner. Check what your workplace actually offers, then make sure you’re getting all of it.

5. You’re ignoring what your fees are really costing you

Every mutual fund charges a management expense ratio, and in Canada those commonly run between 1 and 3 per cent a year. That sounds trivial until you stretch it out. Over a few decades, the gap between paying 2 per cent and 0.5 per cent or less can erase a serious chunk of your final balance, because you lose the fee plus all the growth that money would have earned.

Here’s why it matters right now. New total cost reporting rules will take effect in 2027, so the embedded fees that used to hide inside your funds will soon be spelled out in actual dollars on your annual statement. A lot of Canadians are in for a shock when that number lands.

Don’t wait for the statement. Look up the management expense ratio (MER) on every fund you hold, and if cheaper options with similar exposure exist, and they usually do, switching can be one of the highest-value moves you make.

Final thoughts

None of this requires earning more or saving more. It just requires making sure the money you’re already setting aside is working as hard as you are. Pick the right accounts, reinvest your refund instead of spending it, match your investments to your timeline, grab every dollar of free money, and stop overpaying in fees. Get those five right, and you’ve quietly handed your future self a serious raise.