Retirement, how much is needed?

For me, I think the key amount of what I need to earn each month in today's Canadian dollars for my wife and I is about $4.0K/month, minimum, before taxes. I anticipate by then that we would be living in a condo somewhere (paid for) and we would be responsible for taxes, maintenance fees, and utilities, so about 1K / month for that. Add in another $700/month for car payments, insurance, and gas and another $500 for groceries and we would have $1.8K/month left over for everything else. At that level of income with income splitting in effect, 15% ($600) for taxes.

To get there, CPP/OAS will provide $1,500 / month at age 67. For my wife, she will receive a combination of US Social Security and Canada OAS worth about $1,600 per month as well at age 67. Since I am five years younger than my wife, I will likely retire at age 62 and collect a reduced pension of $700/month (OAS doesn't kick in until age 67). These amounts grow with the CPI.

That leaves five years where there will be a sizable shortfall of about $1,800/month from ages 62 - 67 and $900 / month from 67 onward that we have to make up with private money. This is in today's dollars.

By my prediction, with inflation at 2% and my rate of return at 5% after retirement, I'll need about 425,000 of my own savings at age 62 to make it through age 100 with money left over. Canada like the US provides several ways to save money tax-deferred or tax free until withdrawal.

Most investment advistors advise that you will need 70-75% of your preretirement income to enjoy the same standard of living as you do today. You could use a bottoms up approach as well and just do a post-retirement budget to calculate your income needs.

A chart showing results of choosing your retirement age with Social Security:

Interesting graph I havent seen before. I'm surprised the point of intersection is so close to being the same regardless.

Also interesting that the common choice, 62 or 66 [the chart is dated using 65] yields two lines that come together soon and stay fairly close together pretty long. It's as if you could conclude the right move is either one [no wonder the experts differ on this one]

hm.. normal retirement age=67 for those born after 1959.
taking retirement at 62 = 70% benefit.

5yr for 30%? aka 6%/yr penalty

delayed retirement gets you a 8%/yr bonus, up to age 70.
so 24% bonus if you collect benefits at age 70.

if i dont need the $, guarenteed 8%/yr increase sounds good and a no brainer to delay benefits till age 70??
(i'll take guarenteed 8%/yr vs avg 10%/yr in the stock market)

Quote: 100xOdds

hm.. normal retirement age=67 for those born after 1959.
taking retirement at 62 = 70% benefit.

5yr for 30%? aka 6%/yr penalty

delayed retirement gets you a 8%/yr bonus, up to age 70.
so 24% bonus if you collect benefits at age 70.

if i dont need the $, guarenteed 8%/yr increase sounds good and a no brainer to delay benefits till age 70??
(i'll take guarenteed 8%/yr vs avg 10%/yr in the stock market)

I agree with delaying and will not take any of my pensions until I quit working, likely at 70 but the math isn't so simple. You need to factor in how long you are going to live which of course is not exact science. To die after collecting 1 months pension does not work so well.

For anyone here who has their own business, or is in a small group of like-minded individuals, look into a "New Comparability Plan". Best retirement vehicle yet. By FAR.
You can google it.

I note the frequent use of the word "plan" in these various posts and that is all just fine and dandy. Plans? I wonder what plans all those with foreclosed mortgages had? I wonder what plans college students had when they show up at their parents home utterly jobless? Plans? Yes, they are great things.

Flea don't be so negative. We all have to have plans just because our last ones didn't work out doesn't mean we should quit trying. Never ever give in to the dark side just keep on pushing back.

Quote: FleaStiff

I note the frequent use of the word "plan" in these various posts and that is all just fine and dandy. Plans? I wonder what plans all those with foreclosed mortgages had? I wonder what plans college students had when they show up at their parents home utterly jobless? Plans? Yes, they are great things.

There's an old saying that says "If you want to make God laugh, tell him your plans."

Quote:

A Wells Fargo survey...found that near-retirees have the least amount of money saved for retirement of any group surveyed. Americans ages 60 or older reported having a median retirement savings of just $50,000 while those age 55 to 59 had saved three times as much. The annual survey, conducted by Harris Poll on behalf of Wells Fargo, included more than 1,200 people age 40 and older.

Saving earlier helped put the younger cohort ahead of their elders. Respondents ages 55 to 59 said they began saving when they were 31, on average, while those age 60 and older waited until they were 37.

"It's a small difference in when they started, but it's created a big gap in savings for two age groups right on the doorstep of retirement," said Joe Ready, head of Wells Fargo Institutional Retirement and Trust.

On track to do even better, those ages 40 to 49 (the youngest group surveyed) started saving at an average age of 27. They reported having a median $80,000 put away for retirement.

Quote:

Another common strategy is to work longer. Unfortunately, that's not always up to you. Nearly half of retirees in the study said they were forced to retire early for reasons beyond their control — 37 percent cited health issues and 21 percent said it was an employer decision.

http://www.cnbc.com/2015/10/22/