Retirement Income - How much income will I need?

How much income will I need in retirement? This is a very common question for Canadian’s nearing or entering retirement.

A secure and enjoyable retirement depends on having enough income to maintain your lifestyle. As Canadians are living longer and healthier, the amount of retirement income is probably much higher than you may think.

One of the most important steps in retirement planning is to start early and use a competent financial planner to help you calculate your retirement needs and the level of retirement income.

A proper retirement plan will analyze where you are today from a retirement savings point of view, determine what your retirement life goals are and how much income you’ll need to achieve those goals. Once you know how much retirement income you’ll need, a retirement planner will help you to set up the right saving plan, if necessary, to achieve your income goals.

A proper retirement plan will also take into consideration all government pensions such as CPP, OAS plus all workplace pensions along with personal savings in helping to determine whether a surplus or deficit exists.

There is some good news! At retirement, some of your personal spending may be reduced such as spending for clothing and transportation. Instead of contributing to a public pension, you will take income benefits. Rather than being a saver, you will be a spender. 


Financial planners have long believed you should aim at replacing 60% to 70% of your pre-retirement income. But people retiring today are likely to live longer and be more active. Based on industry research, its believed that Canadians should plan on replacing 75% to 85% of their pre-retirement income. The exact amount will vary, depending on factors such as your plans, your living situation and what part of the country you live in. The bottom line is that you will need to assess your own personal situation in order to come up with a replacement income rate that is right for you.

A good place to start is with a qualified financial planner. A financial planner should encourage you to consider a retirement plan process whereby they will collect information from you, complete the calculations/ analysis and present it to you in a written plan. A properly developed written plan can easily take many hours of work for the planner to complete so you may expect to pay a fee to have a written plan developed. A written plan will provide the background calculations that were used to come up with the financial analysis and make recommendations for a comfortable retirement that will meet your objectives.

Beware of…
Many financial institutions may claim to offer a financial plan but they’re usually just an investment analysis of your existing portfolio and an effort to sell you more product and services. You should ask your financial planner to see a sample financial plan. You should also ask the planner to provide testimonials and references from clients that have been through their financial planning process.

The more you know, the better prepared you will be to ensure that your retirement income matches your goals. If you would like to speak to a qualified financial planner, please click on our Need an Advisor page.