Amount for retirement?

**strezzed** · 06-11-2009, 12:41 PM

Does anyone know of any great tools that would help calculate the amount we need for retirement?

A bit of background:
Dh is 35 and I'm 30. We have finished all of our debts, including our mortgage, and have $10k in emergency fund (plus $200k unused HELOC). Our retirement savings are minimal (uner $5k) at this point. We cannot start saving now as DH is out of work but would like to the minute he starts working.
No children yet (possible not ever, unless we adopt, which DH is not agreeing to).

**lisaflex** · 06-11-2009, 07:13 PM

it all depends. you should contact a financial advisor.

what about life insurance? do you have any? you may not need it if you are not going to have a family.

i think (opinion...i sell hlth/life insurance) that at your ages, you should aim for a minimum of 2 mil by the age of 63 in order to retire. now, getting it done is another question. it is definitely best to consult a reputible advisor for this information.

**miss_cas** · 06-11-2009, 08:26 PM

Honestly, social security may not make it til you and I retire. There is absolutely no tellin' what the future holds. You best bet is to live cheaply as possible and save as much as you can.

**strezzed** · 06-11-2009, 09:24 PM

Originally Posted by 0911laob

it all depends. you should contact a financial advisor.

what about life insurance? do you have any? you may not need it if you are not going to have a family.

i think (opinion...i sell hlth/life insurance) that at your ages, you should aim for a minimum of 2 mil by the age of 63 in order to retire. now, getting it done is another question. it is definitely best to consult a reputible advisor for this information.

I will contact an advisor, but I'd also like to get input from various sources, as I know certain advisors work on commission.

As for life insurance, we have a minimal term amount that we haven't changed since we had our mortgage. We covered the five basic needs (mortgage, other debts, funeral costs, children's education which didn't apply, and survivor benefits). I was licenced to sell insurance and funds at one point in my life. So now I know that we're self-insured. No need for insurance.

Any reason for the 2 million by age 63? What's the basis of that?

**strezzed** · 06-11-2009, 09:26 PM

Originally Posted by miss_cas

Honestly, social security may not make it til you and I retire. There is absolutely no tellin' what the future holds. You best bet is to live cheaply as possible and save as much as you can.

You're absolutely right! There's no way I'd rely on CPP or OAS (in Canada) to fund my retirement. I know it's my responsibility to ensure that I have enough money for it.

**forHISglory** · 06-11-2009, 10:32 PM

[ame="http://www.frugalvillage.com/forums/showthread.php?t=120618"]Websites for financial savvy[/ame]
I started the above thread here on FV so that folks could use it as a resource. It contains all sorts of site that have calculators and other tools and resources.

Hubby and I are retired, and we used these tools extensively as we planned and worked toward retirement. Then we also contacted a financial advisor and it was the best step we had ever taken, financially. There is a fee, but what we have made from our investments has been well worth it.

**strezzed** · 06-11-2009, 11:45 PM

Originally Posted by forHISglory

Websites for financial savvy
I started the above thread here on FV so that folks could use it as a resource. It contains all sorts of site that have calculators and other tools and resources.

Hubby and I are retired, and we used these tools extensively as we planned and worked toward retirement. Then we also contacted a financial advisor and it was the best step we had ever taken, financially. There is a fee, but what we have made from our investments has been well worth it.

Thanks, forHISglory. I'll follow this thread too.

**MomToTwoBoys** · 06-12-2009, 11:28 AM

DH and I have been discussing this as of late because he'll be 35 when we pay off our debts. As of now, any extra income I have goes into savings and I'm only 31. I have a pension that'll be with me for the rest of my life, but I don't want to rely on that.

The reason for such a high number is that once you reach certain age limits, you'll experience changes in any insurance coverages and the like. I think Alberta Health Care's premium thing is only until 65, so you'll have to pay for health care after that age as well. I'm not sure if that's changed, though, when they changed the policies this past January.

They say that the market is prime right now for people to invest. If you put $400/mo into your investment portfolio from 25-34, you end up having the same amount of money as if you do it from 35-65.

http://money.cnn.com/2009/06/01/pf/e...ion=2009060210

That's a good one if you're starting retirement savings late.

I'd really ask a financial advisor at your bank, as well, as to what your options are.

**strezzed** · 06-12-2009, 04:08 PM

Originally Posted by MomToTwoBoys

The reason for such a high number is that once you reach certain age limits, you'll experience changes in any insurance coverages and the like. I think Alberta Health Care's premium thing is only until 65, so you'll have to pay for health care after that age as well. I'm not sure if that's changed, though, when they changed the policies this past January.

That's an interesting notation MTTB. My father was over 70 when he had his heart attacks, which landed him in the hospital. His entire stay plus defibrillator pacemaker surgery was covered by OHIP (Ontario's health insurance). He didn't have any private insurance. I think it kicks in after 65 or something like that.

Thanks also for the article.

**monkeywrangler71** · 06-12-2009, 06:15 PM

Here is a calculator from TD which will tell you approximately what you need and how much you will have to contribute to reach that goal - based on how much annual income you want, in today's dollars (calculator works out the inflation for you)

http://tools.tdcanadatrust.com/tdam-...Calculator.asp

CPP will not provide enough for you to live comfortably, but there is no reason to think that it won't be there at all. It never hurts to oversave, but it should be included in your calculations. Also keep in mind that your health care expenses will increase with age, even though more is covered by the government - you will need more medication, equipment, possibly assistance, etc. Another thing to consider is your home and whether you would be staying in it while retired, downsizing, or moving into a condo or apartment - depending on your plans this could result in higher expenses (condo fees) or a lump sum of extra savings (buying a less expensive home). Consider the type of lifestyle you want for retirement and aim for a savings level that will support that lifestyle.

If you decide to save through an RRSP, keep in mind that it will be fully taxed when you withdraw it. Unless your income is high enough to benefit from the tax deferment, keep you retirement savings unregistered. Particularly if you plan to invest in anything other than an interest bearing vehicle - unregistered capital gains and dividend income are taxed at a lower rate than regular income, registered capital gains and dividend income are not. You can easily end up paying more tax by using RRSPs. Max out your TFSA first, and unless you are top bracket, keep your stocks in an unregistered account and pay the taxes now. You'll thank yourself when you're 65 and don't have to pay taxes on your savings.

Sorry, I'm getting off-topic.

**monkeywrangler71** · 06-12-2009, 06:26 PM

Originally Posted by MomToTwoBoys

The reason for such a high number is that once you reach certain age limits, you'll experience changes in any insurance coverages and the like. I think Alberta Health Care's premium thing is only until 65, so you'll have to pay for health care after that age as well. I'm not sure if that's changed, though, when they changed the policies this past January.

You do not have to pay for Health Care in Alberta after age 65, every Canadian is entitled to publicly funded and administered health care regardless of age. What happened at 65 is that you no longer had to pay the premium - you were still entitled to the care. The policy change in January eliminated the premiums altogether.

**strezzed** · 06-12-2009, 07:13 PM

Originally Posted by monkeywrangler71

Here is a calculator from TD which will tell you approximately what you need and how much you will have to contribute to reach that goal - based on how much annual income you want, in today's dollars (calculator works out the inflation for you)

http://tools.tdcanadatrust.com/tdam-...Calculator.asp

CPP will not provide enough for you to live comfortably, but there is no reason to think that it won't be there at all. It never hurts to oversave, but it should be included in your calculations. Also keep in mind that your health care expenses will increase with age, even though more is covered by the government - you will need more medication, equipment, possibly assistance, etc. Another thing to consider is your home and whether you would be staying in it while retired, downsizing, or moving into a condo or apartment - depending on your plans this could result in higher expenses (condo fees) or a lump sum of extra savings (buying a less expensive home). Consider the type of lifestyle you want for retirement and aim for a savings level that will support that lifestyle.

If you decide to save through an RRSP, keep in mind that it will be fully taxed when you withdraw it. Unless your income is high enough to benefit from the tax deferment, keep you retirement savings unregistered. Particularly if you plan to invest in anything other than an interest bearing vehicle - unregistered capital gains and dividend income are taxed at a lower rate than regular income, registered capital gains and dividend income are not. You can easily end up paying more tax by using RRSPs. Max out your TFSA first, and unless you are top bracket, keep your stocks in an unregistered account and pay the taxes now. You'll thank yourself when you're 65 and don't have to pay taxes on your savings.

Sorry, I'm getting off-topic.

Thanks for the calculator! And the tips. I've been playing around with it a bit.

I'll join you on your tangent: We've been arguing over RRSP versus investment in property versus other options. Our tax rate near at/near retirement will be higher than now so we don't want to get hit. We've maxed out our TFSAs this year and plan on doing so every year. The only reason I contribute to RRSPs right now is that my employer matches up to 5% gross income. I take full advantage of that (100% return). As for the rest of our liquid assets, we've kept some of it in unregistered TD money market funds for liquidity. Right now, returns are still better than a savings account. We also keep a cushion in our chequing account. This is how we're keeping things until DH finds work. When he does and we've accumulated 20-30k the arguing will start again about what we will invest in. Can't wait for that to begin again!