How Much Retirement Income Do You Need?

Calculate your required retirement income.

By Ivon T Hughes
how much retirement income do you need
Figure 1. How Much Retirement Income Do You Need

When is it the best time to calculate your retirement income?

The best time to calculate your required retirement income is naturally enough before you retire. A look at how much you spend or how much you save today out of your monthly salary or revenues will already give you an idea of how much retirement income you’ll need after you stop working. Thinking about possible changes in your outgoing expenses can then help you to make more accurate estimates: for example, you may have finished paying off the loan on your house, but your utilities bills will probably go up if you spend more time at home.

Meeting Expectations

For Bill, a veterinary doctor, retirement is still a couple of years away, but every once in a while he makes a quick check on the finances for himself and his wife Linda. Their goal is to make sure they have guaranteed regular income to cover all their expenses, whether home, medical or leisure-related. ‘I don’t want any surprises!’ is Bill’s motto. After a lively career as a vet (including being regularly called out of bed at three in the morning during the lambing season), he wants a little peace and quiet, at least to start off.

The Right Preparations

‘We’ve already put in place a retirement annuity’, Bill explains. ‘It was straightforward and we could easily see what our different options were.’

Their bank statements and receipts gave them a good idea of their spending and where the money went.

Most of their expenses were found to be quite stable.

They made a list of any ‘big ticket items’ they might want to finance in the future, such as buying a new car or going on vacation

A talk with their annuity advisor and a handy annuity calculator let them see what kind of annuity they could buy in order to guarantee the income they want.

This left some of their savings still available for any one-time expenses

Bill and Linda now have an annuity in place with retirement income deferred for 10 years. Bill will continue to work as a vet and earn money for the next few years. The annuity will start to generate income for them from the date at which Bill plans to retire, thereby helping to replace Bill’s earnings from work.

More Planning If You Want

Because Linda looks after the couple’s paperwork, including their tax returns, she has also made sure that not only are the figures correct, but that the annuity is optimized in terms of the tax they’ll pay. Linda used the annuity calculator as well to plan ahead for their income, and she’s using it again now to see how further retirement income might be planned. Their first annuity with revenue deferral was bought when they decided the time was right and Linda is looking ahead to buy another annuity just before Bill’s retirement.

Keeping Your Annuity Options Open

There are further options as well. While Bill has been tending to animal welfare, Linda has been looking at possibilities such as annuities with an indexed dimension that allows them increasing annual income. The reason for her interest? ‘Knowing Bill like I do, after a couple of years of peace and quiet, he’ll probably be thinking up new things for us to do. With a first annuity already in place to guarantee us fixed income, a second annuity growing for our old age this time could give us the best of both worlds.’

If Bill’s and Linda’s situation sounds familiar and you’d like to know more about your own retirement options with an annuity, then call us today at 1.877.842.3863 for a friendly, open discussion free of charge.

Ivon T Hughes
Phil Barker

About the Author

Phil Barker

Phil Barker is a leading expert on life annuities in Canada. has different financial products and has been a recognized authority since 1972.

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