Canadian Capitalist Logo Dark
No Result
View All Result
Sunday, May 18, 2025
  • Login
  • Register
  • Home
  • Economy
  • Investing
  • Markets
  • Real Estate
  • Retirement
  • Tax Savings
  • Trivia
  • Resources
Subscribe
Canadian Capitalist Logo Light
  • Home
  • Economy
  • Investing
  • Markets
  • Real Estate
  • Retirement
  • Tax Savings
  • Trivia
  • Resources
No Result
View All Result
Canadian Capitalist Logo Mobile
No Result
View All Result
Home Uncategorised

Fidelity’s Retirement Math

by Ram Balakrishnan
May 22, 2007
Reading Time: 1 min read
128 5
0
investing leverage
152
SHARES
1.9k
VIEWS
Share on FacebookShare on TwitterShare on Linkedin

On request, Fidelity Canada graciously sent me a copy of their research article (unfortunately, not available online), which concludes that Canadians should be aiming to replace 75% to 85% of their pre-retirement incomes, not 60% to 70% as conventional retirement planning suggests.

Based on StatsCan data, the research assumes that retirees will be spending the same amount as they did in their working years (reduced work-related expenses, less taxes and no contributions to CPP/QPP etc. offset by higher leisure expenses and health care costs) and estimates how much of their income retirees need to replace, taking into account public pensions such as OAS, CPP and GIS.

The article cites an individual earning $80,000 per year and spending about $52,000 (Earnings minus taxes minus public benefits minus savings) and estimates that the person would need a retirement income of $68,249, of which only about 20% will be supplied by public benefits. The situation is brighter for a retiring couple. A retired couple with a household income of $80,000 need to replace 75% of their pre-retirement income, 40% of which will be covered by government pensions.

I’ve always been sceptical of a one-size-fits-all link between income and spending. While there is definitely a loose link between the two (our spending tends to go up as our incomes rise), in the example above, if the individual saved 25% of his income instead of 10%, he has to replace less of his pre-retirement income and a higher percentage of his retirement income would be supplied by public benefits. Still, the study is a useful step in researching guidelines for how much income we would need in retirement.

Related posts:

  1. Finding a Financial Advisor, Part 1
  2. Carnival of Debt Reduction # 19
  3. Q&A with Vanguard Canada
  4. Reader Question on Bond Allocation
Share61Tweet38Share11

Get real time update about this post categories directly on your device, subscribe now.

Unsubscribe
Previous Post

The Canadian Tour of Personal Finance Blogs # 3

Next Post

Reader Question: Which Stocks Should I Buy?

Ram Balakrishnan

Ram Balakrishnan

Related Posts

Why you cant afford a house in Canada

Why You Can’t Afford A Home In Canada?

January 24, 2022
558
investing benefits
Investing

Finding a Financial Advisor, Part 1

June 19, 2021
2.2k
investing in bitcoin

Is it time to invest in Bitcoins again?

May 13, 2019
2k
when do reits liquidate
Uncategorised

Performance of Currency-Neutral S&P 500 Index Funds

January 19, 2014
2k
is mortgage interest tax deductible
Uncategorised

The 2013 Sleepy Portfolio Report Card

January 12, 2014
2k
how to buy individual stocks in canada
Uncategorised

Asset Class Returns for 2013

January 5, 2014
1.9k
Next Post
retirement income portfolio

Reader Question: Which Stocks Should I Buy?

Please login to join discussion
Canadian Capitalist

© 2022 Canadian Capitalist

Navigate Site

  • Home
  • Disclaimer
  • Privacy Policy
  • Advertisement
  • Contact Us

Follow Us

No Result
View All Result
  • Home
  • Economy
  • Investing
  • Markets
  • Real Estate
  • Retirement
  • Tax Savings
  • Trivia
  • Resources

© 2022 Canadian Capitalist

Welcome Back!

Sign In with Facebook
Sign In with Google
Sign In with Linked In
OR

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Sign Up with Facebook
Sign Up with Google
Sign Up with Linked In
OR

Fill the forms below to register

*By registering into our website, you agree to the Terms & Conditions and Privacy Policy.
All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
two man and woman standing on doorway
The man who does not read has no advantage over the man who cannot read - Mark Twain