Newspaper article The Canadian Press

Get Rich and Don't Die Trying? How to Make Sure You Have Enough for Retirement

Newspaper article The Canadian Press

Get Rich and Don't Die Trying? How to Make Sure You Have Enough for Retirement

Article excerpt

How much money do you need for retirement?


TORONTO - When people picture retirement, they may envision lying on a sandy beach with a mojito in hand or teeing off on a breathtaking golf course in Hawaii.

What they usually don't consider is the alternative: being broke and struggling to pay the bills.

So how do you ensure you have enough money saved for the retirement of your dreams when you don't know how long you will live?

The wisest advice, according to financial experts, is to budget conservatively because it's always better to have some money when you die than no money while you're still alive.

"Most people are living longer than their parents and their grandparents did," said John De Goey, a certified financial planner and portfolio manager at Industrial Alliance Securities.

"A good baseline is that you need to plan to live until age 90."

There are several factors that could also affect a life expectancy, including whether there is a family history of health problems and one's gender. On average, women tend to live longer than men so they should plan on living a few years past 90, whereas men might be able to get away with planning on living a few years less.

But how much money do people actually need to save for retirement?

In the past, the general industry standard was that retirees should have about 70 per cent of their annual income for every year in retirement. Some say that figure is now too much.

De Goey says retirees should look at saving about 50 per cent of their annual income in their final year of work, with the funds coming from a variety of sources including cash, investments, Old Age Security, pensions. Another thing to keep in mind is retirees will likely find themselves in a smaller tax bracket.

That means if someone has an annual salary of $80,000 a year while working, they should aim to have $40,000 a year for every year of retirement. If they retire at age 65, and live until 90, then they should have a nest egg of $1 million.

Of course, that goal can vary due to a number of factors. Is there still a mortgage or rent to pay? Do you plan on a lot of travelling? Eating out? Or do you picture a retirement filled with staying put and gardening? …

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