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Supplementing the Government Plans
How much income will you need for the lifestyle you deserve after working so hard?
Your house may be paid for. Your children will probably be grown, but you might be helping at least one parent well into your own retirement. You will no longer face work-related expenses, but may want to travel, start new hobbies or indulge a few whims. Also consider that while all Canadian provinces have medicare plans, none cover 100% of your health-related expenses.
As a general rule, if you are now between 40 and 60-years-old, 60-75% of your current household income is a good approximation of what you will need for a comfortable retirement.
Suppose, for example, that Richard and Suzanne currently earn $80,000, and would like to retire on 75% of that, or $60,000. Subtracting roughly $20,000 in government benefits leaves a $40,000 gap to be filled by their employer pension plans and personal savings. We’ll refer to that $40,000 gap later in this discussion.
| Equivalent Income Supplement Required (3% inflation) |
| Annual income supplement required* |
Annual income supplement required in... |
| |
10 years
|
15 years
|
20 years
|
25 years
|
30 years
|
35 years
|
|
$20 000
|
$26,878
|
$31,159
|
$36,122
|
$41,876
|
$48,545
|
$56,277
|
|
$30 000
|
40,317
|
46,739
|
54,183
|
62,813
|
72,818
|
84,416
|
|
$40 000
|
53,757
|
62,319
|
72,244
|
83,751
|
97,090
|
112,554
|
|
$50 000
|
67,196
|
77,898
|
90,306
|
104,689
|
121,363
|
140,693
|
|
$60 000
|
80,635
|
93,478
|
108,367
|
125,627
|
145,636
|
168,832
|
| |
* Current dollars
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