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Retirement Budget

To maintain your standard of living after retirement, specialists say that you need 70% of your gross annual income for the past three years, but it's not set in stone. Every case is different.

For a realistic budget, start by identifying your expectations for retirement. Do you hope to:

  • travel regularly, here or abroad?
  • start a business?
  • settle in another country for the winter or year-round?
  • go back to school?
  • enjoy peace of mind?

Next, adapt your budget to your retirement situation by predicting your expenses as accurately as possible. Some will decrease or disappear all together (you can bid adieu to your mortgage payments and contributions!) whereas others will go up, such as costs for social or recreational activities (goodie!).

To establish your retirement budget, use our budget tables.

The table below shows how expenses differ between working life and retirement.

Expenses During Retirement
Increased Unchanged Reduced Eliminated
  • Social and recreational activities
  • Life insurance premiums
  • Travel expenses
  • Health care
  • Vehicle maintenance
  • Food
  • Lodging
  • Transportation expenses
  • Income tax
  • Clothing
  • Pension fund contributions
  • QPP contributions
  • Professional membership fees
  • Union dues
  • Employment Insurance contributions
  • RRSP contributions

The table below will help you plan your sources of income at retirement, depending on the age at which you retire.

Eligibility for Sources of Retirement Income by Age
Source of Income Age 55 Age 60 Age 65 Age 70
Old Age Security (OAS) pension No No Yes Yes, and increased
Guaranteed Income Supplement (GIS) No No Yes, under certain conditions Yes, under certain conditions
Allowance (ALL) No Yes, under certain conditions No No
Allowance for the Survivor  (ALLS) No Yes, under certain conditions No No
Quebec Pension Plan (QPP) No Yes, under certain conditions Yes Yes, and increased
Surviving spouse's pension No Yes, under certain conditions Yes, under certain conditions Yes, under certain conditions
Disability Benefits No Yes, under certain conditions Yes, under certain conditions Yes, under certain conditions
Supplemental pension plans (SPPs) Possibly Possible Yes Yes
Personal savings Yes Yes Yes Yes

Life Expectancy: A Determining Factor for Your Budget

We often underestimate our life expectancy when establishing our retirement budget. The life expectancy of today's 65-year-olds exceeds age 85, and we can expect it to reach age 90 in a decade or so. You can therefore be optimistic in your dreams of longevity, but don't forget that it directly affects your pension, and as a result, your standard of living at retirement.

For example, if you calculate your pension based on a 20-year retirement and it ends up lasting 30 years, your savings will run out with 10 years of retirement to go. You can imagine how that would affect your standard of living…

With all this information and our budget tables, drawing up your retirement budget is going to be a snap.

You can also use our calculator to quickly determine how much you should be saving to maintain your current standard of living at retirement.

Want a full plan? Check out our retirement projection service.

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