One of the most difficult questions facing people today is how much to save for retirement. In fact, it is such a difficult question to answer with so many factors to consider and that’s why we are here to help. But, you can have a general idea of how much to set aside for retirement by considering a few key things. Most importantly, how much to save for retirement depends on your current age and the amount of years between the day you begin saving and the day you want to retire. Say, for example, you’re in your 20’s and want to retire 40 years from now; you’re actually in the best position because you’ll only have to contribute a small percentage of your income towards retirement for the next 40 years to ensure you have enough. In fact, people in their 20’s only have to set aside between 3-5%t of their income to fund their entire retirement; whereas, people who start saving in their 40’s may have to set aside between 15-20%.
Another factor to consider is whether or not you have a company pension plan with your job or career. If you do, it is always best to take advantage of corporate matching on pension contributions. This will reduce the amount you personally have to save. Plus, you need to know whether or not you can expect full government benefits or partial. In 2014, the maximum government benefits, including Old Age Security (OAS) is $6,618.48 and Canadian Pension Plan (CPP) is $12,459.96 per year for a total amount of $18,967.44 and this is taxable income.
You’ll also need to factor in the age you plan to retire and whether or not you’ll keep working after you formally retire. As the years go by, a growing number of retirees actually work part-time to supplement their pensions with additional income. Finally, you need to consider your lifestyle and how much to plan to spend on your retirement. A general rule of thumb is that you will require 70% of the income you make today to be comfortable in retirement. All things considered, there are many factors that contribute towards determining how much to save for retirement, and we can walk you through the different steps you need to take to ensure you are fully prepared for your retirement.