How much do I need ?

 

 

Despite the generous contribution limits allowed to Canadians, the average contributed is about $ 3 500 per year.

The harsh reality is

Few retirees enjoy an enviable income. Men receive on average $ 501 monthly government pension, women $ 285. Most retirees do not have other sources of income.

The lucky ones

You have a pension from your employer. It contributes regularly, you can also do it. When you retire, you will receive 60% of your income. In addition, your plan includes a cost-of living increase.

However, you should consider the possibility of an early departure or a layoff, etc.. If necessary, consult a financial adviser.

The others

You do not have a pension fund of your employer. You need to organize yourself.

What to do?

Your problem is inversely proportional to the duration and amount required. But whatever it is, see to it!

If you can contribute, do so. If you have not contributed yet or very little, don't get lost in thorough analysis to see how much you'll need. Unless it is almost too late, even by contributing the maximum you can, you will not to do too much or you still can fix it next year.

You'll have time later to assess your situation thoughtfully. You just have to follow, with a clear head, the action plan below.

 
  

 

Action Plan to determine how much you'll need.

Quick CALCULATION in 4 easy steps

Here are some recipes to get a rough idea, quickly ...

Warning: these are techniques to mentally juggle and give you food for thought. You should not base your total plan of action on such approximations.

1. Estimate the income you want for your retirement

To quickly calculate your salary just before retirement, use the rule of 72.

Example. If you retire in 30 years and you think inflation averaged 3% during these 30 years. 72 divided by 3 gives you 27.43. This means that you will get a salary twice as high today in 27.43 years for the same purchasing power.

2. Estimate the capital required to start your retirement

Assuming you will have a retirement life of between 20 and 35.

Your investments will bring you 5% more than inflation during your retirement.

Here is the table very approximate figure to help you secure capital required:

Length of retirement
Required capital for every $ 10,000 in "salary" pension		20 years	25 years	30 years	35 years
		$ 130 000	$ 145,000	$ 160,000	$ 170,000

Use 70% of salary in advance,

calculated in the previous step, if you consider that some expenses are no longer required and that the government will pay even a minimum level of retirement benefits.

Use at least 125%

if you evaluate what can be your career path again and that the level of life you want to have when you approach retirement may be greater than you are now considering.

3. Estimate the future value of your investments

Use the Rule of 72 to quickly calculate how long your investments will double.

You divide 72 by the return of your investment to find the number of years. Example: An investment to 5% double in 14.4 years (72 divided by 5).

Subtract the future value of your investments to get an idea of your capital to spare. If the future value of your investment is more or less 10% of capital required, do not substract, consider it as your margin of error of calculation.

4. Estimate savings "gross" to achieve

You have 20 to 35 years to save.

Your investments will bring you 5% more than inflation and tax-free.

Here is another very rough table to help you quickly figure your savings needs.

Retirement in
Required annual savings for every $ 10,000 in "salary" pension		20 years	25 years	30 years	35 years
		$ 4,000	$ 2,900	$ 2,300	$ 1,800

You will not have to pay these amounts each year if you maximize your investment. See tame the problem.