Achieve the retirement you deserve

STRATEGIES TO FUND A COMFORTABLE RETIREMENT.

Canadians are living longer and that means they’re spending more time in retirement. The average woman retiring at age 65 today can expect to live another 22 years, while a 65-year-old man can expect to live another 19 years.1 To see if you’ll be able to finance the retirement you want, ask yourself these three questions:

1. What will my sources of income be?

Most of us will rely primarily on three sources of retirement income: government benefits, registered savings and non-registered savings. You might also have a company pension plan to add to your income.

Your government benefits may include Old Age Security (OAS) and Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) payments. Some provinces and territories provide additional benefits for retirees. Your financial advisor can provide more information specific to your own situation.

Your registered savings include assets in plans such as a Registered Retirement Savings Plan (RRSP), Registered Pension Plan (RPP) or Tax-Free Savings Account (TFSA). Your non-registered savings include everything else, such as money you have in a savings or investment account or invested in your home.

If you have a company pension plan, this will be specific to you and the company you work for. To find out how the plan works, speak to your human resources representative.

2. What will I spend in retirement?

You haven’t retired yet, so you might not know exactly what you’ll spend in retirement. You can get some idea, though, by looking at your current monthly budget (or creating one) and adjusting it for your retirement needs.

Go through each item on your budget and remove whatever may not apply in retirement. For example, you might have paid off your mortgage by the time you retire. Or your children may no longer be living at home. If you’re saving a set amount for retirement each month, this can be adjusted as well.

You may also have new items to add to your budget, like higher health-care expenses, or extensive travel. Try to think of every expense that could come up in retirement that you’re not paying now. Remember to account for inflation, as the cost of living tends to increase through the years.

After you’ve deleted some expenses and added others, you’ll have a rough monthly post-retirement budget. Your financial advisor can help you determine what your goal should be.

3. How much have I already saved?

Talk to your financial advisor to understand how much you’ve saved in registered and non-registered accounts. Your advisor can take you through different scenarios to give you an idea of your annual retirement income from all your sources.

Add to that your annual potential government benefits. According to Service Canada, the average combined CPP and OAS benefit is about $14,740 per person per year.2 Next, add any company pension benefits you may have.