Will I have enough to retire?

Having enough means your income after tax covers what you spend in every year of retirement. An average can look fine and still hide years when your income falls short.

Start from what you spend

It is easier to judge retirement income against what you spend than against what you earn now. Some costs often stop or get smaller, such as saving for retirement, work expenses and, for many people, a mortgage. Others can grow, such as travel early in retirement or care later on.

Put it as a yearly amount, after tax and in today's dollars, so you can set it against your income.

Look at every year

Your income in retirement usually changes at a few ages:

• When you retire. A workplace pension starts, often with a bridge benefit, and you may start drawing on your savings.
• When CPP and OAS start. You can start CPP from 60 to 70 and OAS from 65 to 70. Until they start, the rest of your income has to cover the gap.
• When a bridge benefit ends, usually at 65. See Bridge benefit: what happens to your pension at 65.
• When your savings run out, if you plan to spend them by a set age.
• As prices rise. A pension that doesn't fully keep up with inflation buys a little less each year.

An example

Someone retires at 59 with a workplace pension, a bridge benefit and an RRSP of $200,000 that they add to until they retire. They want $55,000 a year after tax.

• From 59 to 64, their income is about $48,200 a year, under what they want.
• At 65, the bridge benefit ends, but CPP and OAS start, so their income rises to about $57,600.
• After 65, their pension rises with only half of inflation, so in today's dollars their income slowly falls. From age 79, it is under $55,000 again.

Checked only at 65, their income would look like enough. Year by year, there are gaps before 65 and late in retirement.

What the numbers can't tell you

These are estimates in today's dollars. What you spend can change, and returns and inflation may not match what is assumed. Trying a lower and a higher amount of spending shows how much room you have.

The income timeline estimates for one person. In a couple, tax and OAS are worked out for each person separately, so it helps to look at each of your incomes.