One of the fundamental steps to ensuring a successful retirement is to develop a plan. There are no good or bad moments to start thinking about what you will do at this point in your life. Where will your income come from, how much do you need to save for your dream retirement? Here are 4 tips to start your thinking.
1. Identify your sources of income
Government plans will only replace part of the income you’ll need during your retirement. To maintain your standard of living, the rule of thumb is that you’ll need approximately 70% of your average gross annual income from your last three years of work. Thus, you must include other financial resources such as your personal savings–RRSPs and/or TFSAs–as well as your employer’s pension plan. Take advantage of employer contributions and any increases to your contributions allowed in your collective agreement. This way, you won’t leave money on the table!
2. Set your retirement age
Setting the age at which you will retire determines how much time you’ll have to save and reach your goals. Remember to build your plan around the number of years you’ll be contributing!
3. Calculate how much to save per year
It’s a good practice to save 10% of your annual after-tax income. Of course, your ability to save will vary over time and with your life events. The key is to create a flexible plan and start saving now, regardless of the amount.
4. Use our planning tools
Here in the MY ACCOUNT secure section of our website, use On Target Retirement® to estimate your retirement income and follow Penny, your virtual guide, for tips on how to reach your goals. You can also contribute to your plan through the My transactions menu, by clicking on Contribute.
*Source: Institut québécois de planification financière (IQPF)