Dear Caroline, A woman at my bank just told me I need to save up approximately a million dollars in my RRSP to retire. Needless to say, I find this figure a tad overwhelming. Is she right?
Thanks,
Stephanie
A: Stephanie, I don’t want to scare you, but depending on what kind of lifestyle you want when you retire, you might actually need to save more than that. Yes, a million dollars seems like a ton of money (and it is!) but consider that the average life expectancy of a girl born today is 81. So if you stop working at 65, you need to be able to cover your expenses for at least 16 years. Based on that, a million dollars buys you a before tax income of $62,500 a year (after tax you’re looking at under $50,000 a year according to 2011 numbers for your province, Ontario). And if you live longer, well you need money for that too…(read the full article by clicking the link below)
Thanks,
Stephanie
A: Stephanie, I don’t want to scare you, but depending on what kind of lifestyle you want when you retire, you might actually need to save more than that. Yes, a million dollars seems like a ton of money (and it is!) but consider that the average life expectancy of a girl born today is 81. So if you stop working at 65, you need to be able to cover your expenses for at least 16 years. Based on that, a million dollars buys you a before tax income of $62,500 a year (after tax you’re looking at under $50,000 a year according to 2011 numbers for your province, Ontario). And if you live longer, well you need money for that too…(read the full article by clicking the link below)
http://www.chatelaine.com/en/blog/post/28958--ask-caroline-financial-advice-from-a-chatelaine-com-expert
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