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Creating a nest egg for retirement should be the primary goal for the majority of individuals. So, you need to save enough to lead a comfortable life in retirement. In this article, we take a look at the average balances in the retirement accounts of 65-year-old Canadians and how they stack up compared to those in the U.S.
What is the average RRSP balance in 2024 for a 65-year-old?
According to Ratehub, the average RRSP (Registered Retirement Savings Account) is $129,000 for those over the age of 65. Comparatively, in the U.S., the average 401k balance for this age group is much higher at US$232,710 (CA$317,687).
While Canadians will also have savings and investments in other accounts such as the TFSA (Tax-Free Savings Account), we can see that average RRSP balances are far from ideal. For instance, most Canadians believe they need to save at least $1 million to lead a comfortable life in retirement.
So, how can you bridge this shortfall? Well, if you are behind your savings goal, it’s time to reassess your finances and lower non-essential expenses such as eating out or travelling. It’s also crucial that you don’t have a high exposure to high-interest debt such as payday loans or credit cards.
On the other hand, you need to increase your allocation to inflation-beating asset classes such as stocks. It’s essential to identify a portfolio of companies that enjoy a wide economic moat, stable cash flows, and a widening base of earnings. One such TSX dividend stock is Brookfield Renewable (TSX:BEP.UN).
Brookfield Renewable is a blue-chip TSX dividend stock
Valued at $25 billion by market cap, Brookfield Renewable reported FFO (funds from operations) of US$296 million, or US$0.45 per share, an increase of 8% year over year. Its robust Q1 results reflect the company’s diversified portfolio and growth initiatives.
The clean energy giant now expects to increase its FFO per share by 10% in 2024, which should support its dividend growth. Currently, Brookfield Renewable pays shareholders an annual dividend of US$1.42 per share, indicating a forward yield of over 5%. Additionally, these payouts have almost doubled in the past decade.
Brookfield advanced its commercial priorities as it secured contracts to deliver an additional 5,200 gigawatt hours per year of generation. Its investments in capital expenditures have meant that Brookfield is on track to bring on 7,000 megawatts of new renewable capacity in 2024.
Moreover, it continues to focus on capital recycling initiatives and is expected to generate US$3 billion of proceeds in 2024 at attractive returns. BEP ended Q1 with US$4.4 billion in total liquidity, which will be deployed in attractive investment opportunities.
BEP stock is down 39% from all-time highs, allowing you to buy the dip and benefit from outsized gains when market sentiment improves. Priced at less than 20 times forward earnings, BEP stock is quite cheap, given its steady earnings growth and tasty dividend yield.
The clean energy stock has already returned 400% to shareholders in the last two decades. But, after adjusting for dividends, cumulative returns are closer to 1,730%.