This article was reviewed by Chris Singer, CFP®.
It’s not that much anymore
Is a million enough? It used to be that having a million dollars was a big deal, right? You were set for life with no cares or worries financially. When did that change?
Have you ever made any statements such as; I remember when gas was only 25 cents per litre. As my kids remind me, yes I am getting older but it also means that inflation is slowly affecting the cost of living.
If you had a million dollars saved to provide for retirement, how much income would you have?
Annual Gross Income = $50,216.12
Based on the following assumptions:
- Savings – $1,000,000
- Investment Return – 5%
- Inflation – 3%
- Length of Retirement – 25 years
This total is what you would receive before tax. There is lots of debate on how much of your pre-retirement income is enough as a retirement goal. Typically the number can range from 50% to 70% of pre-retirement income.
If you are within 10 years of retirement you should have a detailed written plan illustrating the cash flows that you will need. For people that are farther out from retirement, you should have a rough calculation or general financial plan showing your strategy to save money and reduce debt for retirement.
If you have any questions don’t hesitate to reach out.
Facts & Figures:
OAS* (Old Age Security) is currently:
Maximum monthly amount is $549.89
Average monthly amount is $515.97
*http://www.servicecanada.gc.ca/eng/isp/oas/oasrates.shtml
CPP** (Canada Pension Plan) is currently:
Maximum monthly amount is $1,012.50
Average monthly amount is $596.66
**http://www.servicecanada.gc.ca/eng/isp/pub/factsheets/rates.shtml