How much retirement income do you need?

We often hear that your retirement income should be 70% of the income you earned while working. Did you know that it actually depends more on each person's situation? Depending on your needs, retirement lifestyle and debts, replacement income may vary between 50% and 100%. Everyone has to estimate "how much is enough?"

Ask yourself the right questions

Regularly evaluating your financial health is the best gauge for yourself and your loved ones. To evaluate your retirement needs, you have to analyse your present to best predict your future. Here are some questions to start you off:

What are your current financial obligations?

• Family
  • Are you single, married, in a civil union with or without children?
  • Are your children still living at home?
  • Are you part of a blended family?
• Work
  • Are you self-employed?
  • Do you have a company pension plan? Will your pension be indexed to inflation?
• Budget
  • What are your overall incomes and expenses? How much does it cost you to live?
  • What are your current RRSP and non-RRSP savings?
  • Have you finished paying your mortgage? Are you planning on selling or renovating?
  • Do you own one or more cars? Are you planning on changing your car soon?
• Projects
  • Are you planning to go back to school?
  • Do you like to travel?
  • Will take full or partial-retirement? In how many years?

Your debts at retirement
(Certain expenses will decrease while others increase.)

• Will your health hinder your retirement?
• What will happen to governmental income support programs? Health programs?
• Will you have to take out private insurance to cover the fringe benefits you previously received from your employer?

Act now!

Your retirement may span 20 or 30 years (survival probabilities are increasing). What will you do with your free time? It's time to plan for your retirement even if some factors are impossible to gauge: life expectancy, fluctuating inflation rates, interest rates, financial market behaviours or even taxation.

For all of the articles, visit the Did you know page.

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