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Pattie Lovett-Reid

Chief Financial Commentator, CTV


How much is enough to see me through retirement? This is the number one question retirees typically face.

It is a tough question to answer because lifestyle determines how much you really need. In other words, it is all about your income-to-expense ratio. The real question then becomes whether you can generate enough income to cover off all of your expenses.

There is a tendency to focus in on the size of your portfolio, which of course is good place to start. However, to really understand your total income you need to dig a little deeper.

Like your portfolio, your retirement is not one size fits all. I’ve witnessed those with modest savings but a gold standard pension plan enjoy a long retirement. In addition, those who may have accumulated little wealth have enjoyed a robust and fulfilled retirement by spending very little. On the flip side, those with significant portfolios but lavish lifestyles may not have enough to last through their golden years.

Therefore, it comes back to expenses: the greater your living costs, the more income you need.

This leads me to dig a little deeper and address the need for a full appreciation and understanding all of your sources of retirement income: government pensions, registered money, non-registered money, and potentially any employment pension coming your way.

All too often people are embarrassed about the size of their portfolio but have underestimated the impact and value of a company pension plan.

For example, if you’ve determined you will have a $40,000 pension every year in retirement, that is a big deal – and here’s why. The equivalent replacement of this in a registered portfolio (assuming a three per cent withdrawal) would be roughly $1,300,000.  You might not think you have millionaire status, but you do.

The pension is an often overlooked asset that can take your retirement from good to great – as long as you manage your expenses, of course.