How much do I need to save for retirement? That’s a difficult question. Perhaps an easier one is how much retirement income will I need? This calculator tells you how much you’ll have to save to provide your target income. For each retirement age in the range you’ll see how much you need today and at retirement. Enter your gender, age, desired income and a retirement ages. Express desired income in today’s dollars. The calculator will adjust for increases in the cost of living. You can express income as either before or after taxes. Remember RRSP payouts are taxed as income, so if that is where your savings are concentrated, assume before tax dollars.

Don’t forget your Canada Pension Plan (CPP) pension. The full benefit pays about $15,500 a year in today’s dollars starting at age 65. It is indexed to the Consumer Price Index (CPI). If you defer your pension until age 70, it increases to about $22,000 a year. That’s income your savings do not have to provide, so reduce your income requirement accordingly. Do the same for any benefit earned under your employer’s pension plan.

Another consideration is your Old Age Security (OAS) benefit. The basic benefit is around $8,250 a year and it’s indexed to the CPI. It is prorated for years you didn’t reside in Canada after age 18. The government will begin to claw back this benefit once your retirement income reaches $81,800. For those with incomes greater than $134,600, the government claws back the whole benefit. Again, reduce your income requirement by your expected OAS benefit.

The calculator’s conversion of income to a lump sum is in accordance with the Canadian Institute of Actuaries Standard of Practice for Determining Pension Commuted Values. This method is used to convert a pension earned from a defined benefit pension plan to a lump sum should you leave the plan sponsor’s employment prior to being eligible for retirement. The underlying interest rate assumption is based on Government of Canada benchmark bond yields.