Thinking of potential goals is easy, actually achieving them is a bit more difficult. Whether you want to get to the gym more often, or start scheduling your time better, these "goals" can often seem more like wishful thinking than purposeful goal setting. 

Well, there’s no magical solution for you to make changes in your life. That’s something only you can choose for yourself. But we do know a way to make those goals achievable. Enter, SMART goals. SMART stands for Specific, Measurable, Attainable, Realistic, and Timely. This handy acronym can guide your goal setting, giving you the tools to make goals that you can actually meet. Let’s dive a little deeper.

Specific

If your goal is vague or undefined, how can you expect yourself to meet it? Give your goal shape by defining what exactly you want.

Let’s make this real by using retirement as your specific goal.

(We’ll be using RRSPs in this example, however it’s important to note that there are a number of ways to save for retirement, including RRSPs, TFSAs, and cash accounts.)

When it comes to RRSPs (Registered Retirement Savings Plans), it’s hard to define a goal if you don’t really know what to expect in retirement. Statistics Canada recommends using between 65% and 75% of current pre-tax annual income for retirement planning purposes. So, say you’re making $50,000/year—your goal would be to have a retirement income between $32,500 and $37,500 annually.

Now this income will be a combination of income from your work pension (if you have one), RRSPs, CPP and OAS. The trick here is to figure out how much the other sources will be paying you and see what shortfall you need to make up with your RRSPs.

Measurable

This is how you can track your progress and figure out what exactly you need to do to get to the final destination.

Tracking your progress when it comes to RRSPs means looking at your overall financial picture and seeing if you need to make any changes. We recommend doing an annual review of your RRSP investments with your advisor. The review process will take into account how well the investment is doing, and check in to see if you’re still comfortable with the risk level of your investment. This is also a good time for you to see if any adjustments need to be made to your contributions to be able to reach your goals, or if there have been any changes in your life circumstances that you need to adjust for such as a new baby or a new job.

Attainable

While we’re all for you challenging yourself, making sure that your goal is also possible is key to preventing a cycle of disappointment.

Setting a goal that works with your budget, your tolerance to take on risk, and time horizon will set the expectation of what we can achieve in your RRSPs for retirement. I mean, we’d all love to retire with a multi-million dollar RRSP—but the reality to reach that goal would be handing over 80% of your pay and making ridiculously high-risk choices with your RRSPs.

Setting a holistic plan where you’re contributing anywhere from 10-20% of your pay with pre-authorized contributions, and investing in a diverse, professionally-managed portfolio makes your goals much more attainable.

Realistic

Knowing what resources you have available and how much of them you can give—whether that’s time or money or effort or otherwise—makes for a realistic goal.

No matter what your goal is, the hard-earned money that you put in your RRSPs has to work even harder for you. That means being able to face hard truths about how you can make this money grow for you.

While risk-free options are great for short term goals, if you have long term RRSP goals then you should consider your other options. Working with an advisor allows you to review what avenues there are that could help you achieve your goals. Your advisor can also prepare projections based on different investments and your budget to see what retirement income your RRSPs could provide you.