Jonathan Mercier

By Jonathan Mercier

October 26, 2013

Financial Security

Retirement?… What do you mean by retirement?

Article revised on 28 July 2017

Early retirement, comfortable retirement, phased retirement, late retirement… Any idea which type you will have?

What are you doing to prepare for it? Do you know how much annual income you will need to maintain the same standard of living during retirement? If you are able to answer these questions, you’re on the right track!

That said, there is no magic number for retirement savings: The amount varies from one person to the next and from one household to the next. It depends on various factors, the most important of which are the age at which you wish to retire, whether or not you are contributing to your employer’s pension plan, the expected rate of return of your investments and your standard of living immediately prior to retirement.

Which type of retirement are you preparing for?

Early retirement

Retirement prior to age 60 or eligible retirement age, as determined by the employer. In general, you have to expect to need to make up the shortfall in income for the first few years of retirement, either by finding a new source of income or by drawing funds from your personal savings or RRSPs. It’s a decision you should make after careful reflection, weighing the pros and cons.

Comfortable retirement

 That’s what we all want! The key is to start saving early and keep it up.

Phased retirement

This is the type of retirement you choose when you’re not quite ready to leave the job market, either because you have to address some unexpected events or because your health is deteriorating.

Late retirement

This is retirement after age 65 (or after age 67, for people born after February 1, 1962). Retirement can be deferred for a variety of reasons. It may be because you still derive a great deal of personal satisfaction from your work or because you realize that the income you will receive from the federal and provincial pension plans, added to your personal savings, will not be enough to provide you with an adequate monthly income.

There may be no magic number for retirement savings, but one thing is certain: If, like two-thirds of Canadians, you are not contributing to a defined benefit plan offered by your employer, it would be in your interest to start saving soon, i.e. as soon as you start earning money, either as an employee or self-employed worker. That is the key: The sooner you start saving, the easier it will be to retire and the better your retirement will be.

Are you dreaming of a long and happy retirement? It’s up to you to prepare for it carefully. And the sooner you start, the better!

Note: This article is intended for information purposes only and should not be construed as legal, financial, tax or other advice. The circumstances or elements may vary depending on your individual situation. We encourage you to consult a professional before taking action. La Capitale shall not be held liable for any consequences arising from any decision taken based on the content presented in this article.

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