How To Use A Canadian Retirement Calculator

How to plan for retirement in Canada

Many people use their imagination as a retirement planning calculator to plan a secured future. Dreaming about their last day a work and riding off into the retirement sunset without a care in the world and enough money to do whatever they want. However, only a few have truly worked out the estimated amount of what they need to retire happily. This is because most people are not aware about the importance of using an actual retirement calculator and looking at the real numbers to reach their goals.

With retirement calculators, you can easily see a realistic amount that you will need by the time you retire. This way, you can plan the necessary savings that you have to set aside to reach your desired amount in the future.

Determining how much you need to save to get to the total amount you need to provide you with retirement income is easily calculated using a monthly or yearly investment amounts . From there, you can work towards a more achievable goal. The calculation, however, is greatly dependent on several factors. It does not necessarily mean that using retirement calculators will guarantee your future.

Here is the list of the items that you have to consider when using retirement calculator:

Your present age and your desired retirement age

This will greatly affect the results in the retirement calculator. The available years from your current age up to your desired retirement age will determine the amount of savings you have to accumulate in order to reach your goal.

For instance, if you have a few years to save, then your retirement calculator will tell you that to invest more money if you want to retire with considerable amount of income.

Life expectancy

Your expected life expectancy will also affect the result in your calculator.

  1. Inflation rate
  2. Total CPP, OAS and GIS benefits you will receive
  3. Rate of ROI (return of investment)

These are just some of the probable factors that you have to consider when using retirement calculators. All of these things will have individual effects on the results. In the end, people tend to mix everything up and errors on computations are expected.

Financial experts recommend some common solutions to avoid possible confusions and errors in using the retirement calculator.

Here’s how:

  • Be careful in choosing parameters

Some people tend to choose certain parameters when using retirement calculator. Any considerable errors in the selection can create clear negative effects on the results.

Hence, it is important to be cautious in choosing a particular parameters and try to give some margin for shortfall as well.

For instance, if you are using the “rate of return of investment,” it would be better if you use a lower rate than what the preset rate used is or even the best possible rate available. Things like this will not give you a realistic calculation for your retirement savings.

  • Do not stop at a single scenario

Experts recommend that you evaluate the different parameters that you have used during your first scenario. Keep in mind that these parameters may vary as time passes by. Life can change quickly and you want to be prepared for any financial curve balls that get thrown.

  • Experiment

Do not stop with one scenario and one set of parameters. In order to reach your desired retirement goal, it is best that you experiment with possible changes that could happen i.e. job loss, critical illness, changes in family, salary increases.

For example, interests rates are highly changeable. Hence, experimenting with different rates will provide you considerably different outcomes.

  • Always seek a professional for help

Do not depend on the retirement calculator alone. It is always important to seek the help of a professional. This way, you can get a better understanding of the results of the retirement calculator, get insight on things you may not have thought about and help you implement and monitor your plan.

Knowing its pros and cons will help you understand how to use a retirement calculator. Start your retirement planning with this Retirement and Savings Tool from Empire Life. By using actual numbers you can have a realistic idea how to reach you retirement goals and be prepared for any hiccups along the way.


OTTAWA'S RETIREMENT PLANNING BLOG If you have questions about retirement or financial planning then take a look here. Tons of articles & information on Canadian financial planning topics such as life insurance, investing and more.There are still a lot of misconceptions about money & retirement planning. I just want to help you retire when you want and how you want. As a Registered Retirement Consultant-RRC® and independent adviser, I share my unbiased knowledge to help you have a better understanding of investing, insurance and financial planning.Getting on track for retirement doesn't have to be confusing or complicated. Get the information you need to avoid mistakes and be Ready For Retirement!