Whatever goals you’re hoping to achieve, you can set yourself up for success by articulating the specifics of what you want. Only 3% of adults have specific, measurable, time-bound goals, and they achieve 10 times as much as people without goals.

By using the SMART goals framework, you can get one (or several) steps closer to seeing what’s possible come to life. SMART stands for Specific, Measurable, Attainable, Realistic and Timely.

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 use retirement as an example.

When it comes to Registered Retirement Savings Plans, or RRSPs, it’s hard to define a goal if you don’t know what to expect in retirement. Statistics Canada recommends using between 65% and 75% of current pre-tax annual income for retirement planning purposes. 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. Figure out how much the other sources will be paying you and see what shortfall you need to make up with your RRSPs. This will give you a specific number to work with as you create your goal.

While we used RRSPs in this example, there are a number of ways to save for retirement, including RRSPs, TFSAs and cash accounts. Chat with an expert to figure out the best blend of investments to power your retirement savings goal.

Measurable

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

When it comes to RRSPs, this means looking at your overall financial picture to see if you need to make any changes. Set up annual reviews of your RRSP investments with an advisor. The review process will take into account how well the investment is doing, and see if you’re still comfortable with the risk level of your investment. You can also make adjustments to reach your goals or account for any life changes.

Attainable

Setting a goal that works with your budget, risk tolerance and timeline will set the expectation of what you can achieve in your RRSPs for retirement. While it may sound ideal to retire with a multi-million dollar RRSP, the reality to reach that goal would be handing over 80% of your paycheque and making incredibly 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, money, effort or otherwise—makes for a realistic goal. 

How will you make your hard-earned money grow for you? While risk-free options are great for short term goals, other paths will serve you better if you have long term RRSP goals . 

Working with an advisor allows you to review the options you have to achieve your goals, your way. Your advisor can also prepare projections based on different investments and your budget to see what retirement income your RRSPs could provide you.

Timely

Being mindful of when you want to achieve your goal gives the healthy pressure to work towards it.

The power of compounding returns works in your favour the younger you start. Someone who wants to save about 1 million starting at the age of 21 would need to automatically contribute less money than someone starting at age 31. Using an average return of 6% on a medium risk balanced portfolio, a 21 year old would need to put $350/month to reach 1 million at retirement. To reach that same goal but starting at age 31 you’d need to invest $800/month.