10.1.8 Determine your retirement needs

Now it's time to figure out how much you will need for retirement. There are two ways you can do this.

Method 1: Use the 70 percent guideline

Keep in mind that this guideline provides only a rough estimate of your actual retirement income needs.

The 70 percent guideline

1. Determine or estimate your average gross annual income during the last three years (or your highest earning years) of employment.

2. Multiply by 70 percent.

3. Total amount you will need each year (not counting inflation):

Download the interactive PDF and add it to your Financial Toolkit [PDF - 213KB]

Tip

Don't forget to account for inflation when you calculate your retirement needs. For example, the average inflation rate in Canada from 2006 to 2011 was 1.87 percent. To calculate the rate of inflation for a given year or span of years, use the Bank of Canada Inflation Calculator.

Method 2: Make a detailed budget

This is a more accurate way of calculating your cost of living because you can project your actual income and expenses, based on your current budget.

Budget worksheet

Items	Column A: Previous months ($)	Column B: Budget ($)	Column C: Actual spending ($)	Column D: Difference (B - C) ($)
Income
Salary or benefits	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Canada child benefit (CCB)	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Other	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Total income	$0.00	$0.00	$0.00	$0.00
Basic expenses (needs) - Home
Rent or mortgage payment	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Property taxes/condo fees	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Home insurance	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Utilities (such as electricity, water, cable or telephone)	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Repairs and maintenance	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Basic expenses (needs) - Transportation
Public transportation	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Car loan payment	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Car repairs, gas, etc.	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Car insurance/registration, etc.	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Basic expenses (needs) - Living Expenses
Groceries	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Child care	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Medical and dental	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Outstanding loan payments	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Basic clothing	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Life, disability and medical insurance	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Emergency fund	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Other	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Other expenses (wants)
Restaurants and entertainment	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Clothing (extra)	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Hair care	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Gifts	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Vacations	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Other	Amount for the previous months $ Invalid format	Budget $ Invalid format	Actual spending $ Invalid format	$0.00
Total expenses	$0.00	$0.00	$0.00	$0.00
Savings to reach goals (Total income minus total expenses)	$0.00	$0.00	$0.00	$0.00

Download the interactive PDF and add it to your Financial Toolkit [PDF - 213KB]

For an interactive version of this worksheet, use the Financial Consumer Agency of Canada’s Budget Planner.

See the video, Estimating your retirement needs for more information.

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Date modified:: 2019-03-01