woman planning retirement budget

What’s a typical retirement budget?

There really isn’t a typical budget. It all depends on the lifestyle you expect to live in retirement. To determine how much you’ll need, you may wish to create a personal retirement budget.

How do you budget for retirement?

Creating a budget for retirement is much like creating a spending plan pre-retirement. First, determine how much income per month you’ll have in retirement from all sources. Then add up all your monthly expenses. 

If you have more income than expenses, you’re all set. If it’s the other way around, you’ll need to make adjustments like cutting expenses or finding more income such as a part-time job. 

Retirement income sources

Add up all your retirement savings including registered retirement savings plans (RRSPs)tax-free savings accounts (TFSAs) and non-registered accounts. Your retirement savings may also include assets from the sale of a business if you’re a business owner. Divide your savings by the number of years you expect your retirement to be to get an estimated annual income amount from your savings. Now divide that number by 12 to get an estimated monthly amount.

Add up all your sources of monthly retirement income from company pension plans, government benefits such as Canada Pension Plan (CPP) or Quebec Pension Plan (QPP), Old Age Security and Guaranteed Income Supplement (GIS)

Now add your estimated monthly amount from your retirement savings to your monthly amount from pension and government plans to get your estimated total monthly income. Use this handy retirement income worksheet - Opens in a new window

Note: This estimate doesn’t consider someone living off dividends or a similar constant income stream. 


Read the full article at canadalife.com