There’s a clever advertisement on retirement income showing people carrying around numbers made up of brightly coloured digits strung together on boards. Each one displays a different sum in the one to two million dollar range.
The numbers represent what each person will need for their retirement and the question is “What’s your number?”
Why not change your thinking from your "number" to your "numbers" - the ones you can do something about today?
You can begin working with these numbers now and start to take the mystery out of the question.
biggest concern is where's the pay-check going to come from. The answer is from
your pension plan (if you are lucky enough to belong to one), registered plans,
Canada Pension Plan, Old Age Security, investments and savings.
But will this new pay-check be large enough to cover your lifestyle costs? Before you retire, take the time to put a budget together.
Look at what you are spending today, take away the expenses that you will no longer be incurring at retirement (e.g. clothes for work, travelling costs and contributions to savings) and add the new expenses that you will have (e.g. travel and money spent pursuing hobbies or interests).
Before retirement, take the time to understand the pension plan you have. Talk to the administrator to find out what your monthly pension will be and find out how it’s calculated.
Obtain your CPP statement showing your contributions and your expected monthly benefit at each age from 60 to age 70. This will help you determine whether you should to take early or delayed CPP - see the following link.
Decide how you will be invested so that you know the yield you can expect which then will give you a monthly amount you can withdraw without outliving your means.
When the pay-check you can generate from your different sources of income is large enough to cover the expenses you expect to have at retirement, you can leave your employment (don't forget to allow in your calculations an estimate of the income tax you'll have to pay on all your income).
If the retirement income will not be large enough by the time you reach your ideal retirement age, you can do one of two things or both. Delay retirement until your pay-check will be right or reduce your expenses.
working on your "number" is fine but don't forget about your other
numbers and most importantly, try to get a real feel for the size of your
pay-check in retirement.
Registered Retirement Income Fund and withholding taxes
Changes to the Canada Pension Plan ( CPP) will be phased in by 2016
Tax Free Savings Accounts - a great way to save tax-free
Got a LIRA? - you can unlock an opportunity
Old Age Security - an overview
Link to list of articles
Return to Home Page
Great Retirement E-zine is issued quarterly and
includes links to new articles on retirement planning at this website and other
links of interest. If you wish to receive it, please fill out the form below
and submit it.