The second-worst retirement planning strategy is to haphazardly save money in RRSPs and TFSAs, without any idea of how much income you’ll need when you stop working.
Ready for retirement? Our calculator will tell you how much money you’ll need to replace
The worst strategy is to save minimally or not all, but that may be out of your hands because of high living and borrowing costs. If that’s you, give yourself a temporary pass on retirement saving and revisit the matter in 12 months.
If you’re a retirement saver with no plan, consider buying a consultation with a financial planner at a cost of roughly $1,500 to $5,000, depending on the level of detail. Or, as an interim step, try some of the retirement planning tools available online at no cost. Here are a few to consider:
The Personal Enhanced Retirement Calculator, or PERC (perc-pro.ca)
This calculator was created by actuary Fred Vettese, who is a regular contributor to The Globe and Mail on retirement matters and author of the book Retirement Income For LIfe: Getting More Without Saving More. Mr. Vettese said he developed PERC as an alternative to the many online tools offered by financial companies trying to sell products. The first version was introduced in 2018 – there have been continuous improvements since then. PERC will project your retirement income based on your investments; pension, if applicable; and, Canada Pension Plan and Old Age Security. There’s an addition projection to show the benefits of lowering your investment costs and putting limited money into an annuity. You can add your spouse to the analysis, or do it for yourself alone. There’s a more advanced version you can subscribe to for $135 a year plus tax.
The Canadian Retirement Income Calculator
Created by the federal government, this calculator is an example of your tax dollars at work in a productive way. The idea here is to set a retirement income goal and then see whether you’re on track to get there. You can tweak details like the amount you save to see what impact there is on your ultimate savings. The charts at the end perform a useful service in showing how all the segments of your retirement savings come together, including CPP, OAS, personal savings and pensions. You’ll also find out if your projected retirement income will expose you to the OAS clawback, aka the OAS recovery tax.
The Retirement Cash Flow Calculator
Another calculator from an unbiased source is the GetSmarterAboutMoney website run by the Ontario Securities Commission. This one asks you to supply information about your retirement savings, pensions, etc and then projects how long your money will last. One complaint is that you’ll have to supply your own information on the amount of CPP and OAS you expect. A smart feature allows you to include big one-time expenses at various ages, like a home renovation.