This happens to be the number question for nearly everyone saving for retirement. Asking this question demonstrates your seriousness about achieving your retirement goals. The best way to start is to hire a financial advisor and well…that’s where I can help. Although if you want to try first here’s how to do it:
1️⃣ Begin with the end in mind – How much money will need annually or monthly? If you’re not sure, the average annual expenses spent by a couple in Canada was $57,000 (after-tax).
2️⃣ Government Benefits – Determine how much you expect to receive from Canada Pension Plan (CPP) Old Age Security (OAS). If you receive the average CPP payment, plus OAS, you will have $1,608.29 per month. That’s $19,299.48 per year, gross.
3️⃣ Employer Pension – Will you receive an employer pension?
4️⃣ Passive Income – Do you have any other income streams such as real estate rental income?
5️⃣ Add up all your projected income streams and subtract that from your retirement income need. The difference is the amount of annual income you will need to generate throughout your retirement.
6️⃣ Time value of money – Calculate how much money is needed to produce the annual income needed (the shortfall identified in step 5).
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