I’m curious about how much I should save for retirement and what I will get, so I always enjoy doing these retirement calculators.
One of the ones I recommend all Canadians do for a lark is the Government of Canada one, I was reminded to re-do it again after Rob Carrick tweeted about it.
Not that I’m relying on any of this money (I’m of the firm belief that I will be 100% on my own), here are my results:
NOTE: This is just my half of the retirement pie, and my partner will be contributing an equal amount on his side
OLD AGE SECURITY (OAS) AT AGE 67 = $6624 / year
…that is, if my income doesn’t exceed $71,592 by the time I retire at 67.
OAS DEFERRAL TO AGE 72 = $9012 / year
If I decide to hold off on grabbing that money for 5 more years (age of 72), I can get more money: $9012 / year or +$2389 a year
There are two schools of thought on OAS deferral:
1. You hold off on OAS and get more money… because you get more money if you wait.
2. You don’t hold off on OAS and take it ASAP because you never know when/if you’ll croak within 5 years and you can use the money now and invest it or have it in your greedy little paws instead of letting the government borrow it for another 5 years.
I’m leaning towards #2.
CANADIAN PENSION PLAN (CPP) AT AGE 65 = $3744 / year
I have no idea how to calculate this so I put it at nice, low, $15,000 a year as an annual earned income (I take my salary in dividends so I am technically not entitled to a lot of CPP as I haven’t paid into it).
CPP DEFERRAL TO AGE 70 = $5304 / year
If I don’t have any more earned income for the rest of my life, it still stays at $5304 / year.
REGISTERED RETIREMENT SAVINGS PLAN (RRSP) AT AGE 65 UP UNTIL THE AGE OF 83 = $11,262 / year
I have about $61,429 saved in my RRSPs and I do not plan on contributing any more (I can’t, I take my income in dividends).
I also plan on getting about 5% back on my RRSPs.
With these assumptions of course…
- Inflation rate of 2 %;
- Investment rate of return of 5 % until you start your pension;
- Investment rate of return of 4 % after you start your pension;
- Contributions are made at the end of each year;
- You continue to contribute up to your selected age (no later than 70); and
- You will have no more savings in this plan by the age of 83.
THROWING IT ALL TOGETHER:
Looks low to me, but as it stands, at the age of 65, I can expect to get about $23,190 per year in retirement including my current RRSPs.
Without my current RRSPs, I am looking at a paltry $11,928 a year as a gross income.
Actually less than that because I just noticed my CPP shows up at $5304 (age 70) instead of $3744 at the age of 65.
I am looking more at an annual government pension plan of $10,368 sans my RRSPs
This is why I’m saving above and beyond and not relying on the government.
My REAL retirement income that I can rely on? Whatever my “Other Income” is.
HAVE YOU DONE THE CALCULATIONS FOR YOURSELF YET?