Retirement Income Planning
This financial calculator is your tool to determine the amount of RRSP capital to accumulate and contributions required in order to reach a retirement income that ensures the same standard of living as pre-retirement. By experimenting with various scenarios, you will see the importance of time and return on investment as factors in determining future income.
Consult your last Contributions Assessment Notice to confirm that you may contribute this amount.
The required contributions to reach your goals are greater than the allowable $22,970 limit. Consult your last Contributions Assessment Notice to confirm that earlier contributions not made are still available. If the contribution amount seems too high, reevaluate your plan realistically and of course, get contributions started at soon as possible.
Congratulations. The current value of your RRSP is sufficient to ensure the annual income you want to have upon retirement.
You must enter a Desired Income.
The Desired Income must be numeric.
The minimum Desired Income must be $20,000.
The Current RRSP Value must be numeric.
The Current RRSP Value must be greater than zero.
The desired annual income upon retirement hinges on maintaining a pre-retirement standard of living. Generally speaking, one should maintain a (pre-tax) income of 70% of the pre-retirement income.
You can opt to receive retirement income the best way that suits your lifestyle (annually, semi-annually, quarterly, monthly). Required contributions are adjusted accordingly.
You may make contributions to your RRSP with the frequency that suits you best (annually, semi-annually, quarterly, monthly). The required contributions are adjusted accordingly.
Desired annual income upon retirement as previously described, however adjusted for inflation in order to maintain purchasing power.
Upon retirement, a percentage of income derives from sources other than your RRSP. They may include investment income, rental income, "Régie de rentes du Québec" payments, Canada Pension Plan (CPP) payments, an employer pension plan, etc. Determine the percentage of this income in relation to the total income desired upon retirement.
Required capital is the cash amount you must have in your RRSP at the start of retirement in order to obtain the desired retirement income.
This amount is the portion of income generated by the accumulated RRSP capital. Any remainder is income from other non-RRSP sources (investment income, rental income, "Régie de rentes du Québec" payments, Canada Pension Plan (CPP) payments, an employer pension plan, etc.).
This is the return on investment before taking inflation into account. As an investor, one must determine an acceptable level of risk. Historically, a return of approximately 7% has been observed. Higher rates of return obtained over several years do make important differences on accumulated capital; however, seeking a high rate of return means a greater level or risk. One must be wary of possible losses.
At this stage, returns on investment are normally lower reflecting concerns to preserve the accumulated capital.
The amount of required contributions in order to reach your retirement income objective. Starting as early as possible is of utmost importance. If an amount seems too high, one must consider increasing the number of working years or reducing the desired retirement income.
It is imperative to take this factor into account in order to obtain any kind of realistic evaluation. Although historically there have been very high rates of inflation, there is generally concensus among monetary authorities that a rate of inflation of 1%-to-3% is acceptable.
By determining when to begin retirement, one must keep in mind that the longer one is working, the greater the possibility of having more accumulated capital to start retirement years.
Based on the start of retirement age and life expectancy - and as no one's life expectancy is exactly the same - it becomes necessary to try to predict accordingly.
The total value of assets currently in your RRSP.
What your current RRSP capital will be worth upon retirement.
- The capital amount required upon starting retirement, minus the future value of the RRSP you currently hold.
PLEASE NOTE: This calculator provides general information only; it does not provide specific tax or retirement planning advice. We recommend that you consult a LBS advisor when planning for your financial goals. Amounts projected by the calculator are based on the information you enter and a variety of estimates and assumptions. Along with other data, the calculator assumes that any RRSP contribution amount you enter (or that the calculator recommends) is within your RRSP contribution limit. “Retirement income” refers to gross income before taxes. RRSP amounts are subject to tax when withdrawn. Actual earnings and other factors will vary over time. As a result, LBS cannot guarantee the results. You should repeat the analysis periodically with updated information and when important changes occur in life circumstances.