Personal Finance

Retirement Income Target

  • Last Updated:
  • Nov 19th, 2019 1:28 pm
[OP]
Member
Sep 16, 2009
422 posts
214 upvotes

Retirement Income Target

I know this is a broad question, but wondering what most people think they need in retirement. Most websites/planners will say that you need to budget for 70% of your gross income. Does that seem a bit high? Why does no one talk about it in dollar terms. I mean, at retirement its reasonable to assume your mortgage is done, kids are done with university and your liabilities are in general low. So why does one need 70%?
47 replies
Newbie
Feb 4, 2014
59 posts
39 upvotes
Montréal
Because when you’re not busy working, you buy more “stuff” :)
[OP]
Member
Sep 16, 2009
422 posts
214 upvotes
yasben wrote: Because when you’re not busy working, you buy more “stuff” :)
Lol, do people really have such bad self control? I am in constant purging of garbage mode. I even park both my cars in my garage all year long (!).
Member
Feb 4, 2019
297 posts
351 upvotes
BC
Your pre-retirement income is irrelevant to how much you need post-retirement. The only number that matters is how much you spend. Basically, as long as your retirement income > your spending, you are good.
[OP]
Member
Sep 16, 2009
422 posts
214 upvotes
rhw123 wrote: Your pre-retirement income is irrelevant to how much you need post-retirement. The only number that matters is how much you spend. Basically, as long as your retirement income > your spending, you are good.
Yeah I know that makes sense, but doesnt all that fly in the face of how much one should put into RRSPs?
[OP]
Member
Sep 16, 2009
422 posts
214 upvotes
rhw123 wrote: Your pre-retirement income is irrelevant to how much you need post-retirement. The only number that matters is how much you spend. Basically, as long as your retirement income > your spending, you are good.
maybe i should create a survey with different options...30 K, 50K, 100K, 150K, etc...
Deal Fanatic
Dec 11, 2008
9875 posts
1419 upvotes
Percentage doesn't mean much because it assumes you are actually saving. Given the savings rate in Canada this percentage may not apply well.

I'd say the easiest is just look at your current spend and reduce commuting costs, work clothes and buying lunches.

If you know what you are spending on now, you should have a rough estimate of what you need every month/year. Everyone's amount varies based on lifestyle and expenses.
[OP]
Member
Sep 16, 2009
422 posts
214 upvotes
Just a thread to see how much Total Income (from RRSPs, TFSAs, CPP, OAS etc as well as other investments) do people think they need as a family/couple in retirement, annually?
Last edited by oasis2002 on Nov 7th, 2019 3:45 pm, edited 1 time in total.
[OP]
Member
Sep 16, 2009
422 posts
214 upvotes
speedyforme wrote: Percentage doesn't mean much because it assumes you are actually saving. Given the savings rate in Canada this percentage may not apply well.

I'd say the easiest is just look at your current spend and reduce commuting costs, work clothes and buying lunches.

If you know what you are spending on now, you should have a rough estimate of what you need every month/year. Everyone's amount varies based on lifestyle and expenses.
Thanks - thats fair. I created a poll. Curious to see the results.
Deal Guru
Jan 27, 2006
12530 posts
5704 upvotes
Vancouver, BC
oasis2002 wrote: Yeah I know that makes sense, but doesnt all that fly in the face of how much one should put into RRSPs?
Yes it does but realistically, people have been asking your question about percentages for decades so one has to wonder if the industry's approach is correct!

After all, everyone views retirement differently - some want to travel, some want to stay home, some want to start a business and others don't know what they want. So, how can we pin down a general number when we don't have consistent retirement goals?
[OP]
Member
Sep 16, 2009
422 posts
214 upvotes
craftsman wrote: Yes it does but realistically, people have been asking your question about percentages for decades so one has to wonder if the industry's approach is correct!

After all, everyone views retirement differently - some want to travel, some want to stay home, some want to start a business and others don't know what they want. So, how can we pin down a general number when we don't have consistent retirement goals?
Thats true but the median case would probably stay home a lot more time, sleep, eat, watch tv, do some gardening and travel for maybe 1 -2 months of the year. I mean you can do a lot more, but thats probably the base case. There's always golfing and other local activities to add.
Sr. Member
Jul 8, 2013
997 posts
878 upvotes
Red Deer, AB
$75K would be ideal. After taxes, we'd be looking at $60K per year to spend, which is $5K per month. Very comfortable and a luxurious life.

The $75K would be broken down as follows:
$10K x 2 from CPP = $20K
$5K x 2 from OAS = $10K

The remaining $45K would come from drawing down of RRSP + TFSA. This would require us to have $600K in TFSA ($300K each) and $400K in RRSP ($200K each). We're no where close to that but will get there eventually.
TFSA: XAW | RRSP: VEQT + VAB | Non-Reg: XIC

It's really that simple.
[OP]
Member
Sep 16, 2009
422 posts
214 upvotes
TuxedoBlack wrote: $75K would be ideal. After taxes, we'd be looking at $60K per year to spend, which is $5K per month. Very comfortable and a luxurious life.

The $75K would be broken down as follows:
$10K x 2 from CPP = $20K
$5K x 2 from OAS = $10K

The remaining $45K would come from drawing down of RRSP + TFSA. This would require us to have $600K in TFSA ($300K each) and $400K in RRSP ($200K each). We're no where close to that but will get there eventually.
Thanks! Usual responses on RFD make it feel like everyone needs 200 K per year to have a basic life!
[OP]
Member
Sep 16, 2009
422 posts
214 upvotes
seriesofcontradictions wrote: Inflation-adjusted or not?
Not. I mean today's dollars - so would be different when you retire of course. Its like, as if you were to retire tomorrow.

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