Saving for Retirement - How Much You'll Need to Spend Your Golden Years in Style

You have certain things that you want to do and accomplish once you hit retirement and in order to get them done you're going to need to have enough money by your side. It seems so vague, though, to try to understand how much money you'll really need once you have taken inflation and other factors into account.

If you sit down with a financial advisor you'll often be told that you'll need at least 60% up to 70% of the income that you're earning annually before retirement to live comfortably. This can get a little scary for most Canadian since 70% of the employed here in Canada don't actually have an employer plan for retirement setup. As well, there are only about 33% that are making use of RRSPs every year.

When you retire you don't have the same types of expenses to worry about like raising children, saving for your retirement, mortgage payments and expenses related to employment. When you take these costs out of the equation you'll actually only need about half of your earnings to live on.

As long as you can retire without carrying along a lot of debt baggage you’ll be fine with about 50% of your income since these expenses won't need to be a part of your budget any longer.

If you take a look at what these authors are saying, and they do raise some excellent points, it may make sense for the average Canadian to start paying off more of their debt and investing less in their retirement fund. If you can work towards becoming debt-free while at the same time being able to save for retirement, this would be the ideal setting to reach for.

This also assumes that there will be no major economic changes in the future such as charging for healthcare. As long as that remains stable across the Canadian nation, and there are no major hits in taxes or other financial areas, the average Canadian may not need as much for his retirement as he first believed.

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