For most taxpayers, government retirement plans will cover less than half of their retirement needs. Don’t believe it?
See for yourself…
Frank is a 40-year-old who has never contributed to an RRSP. He works for a private company; his gross annual income is $50,000; and he’s convinced that when he hits 65, his government annuities will be enough for a comfortable retirement.
To maintain his lifestyle, he’ll need at least $35,000 per year, which is 70% of his current gross income. In today’s dollars, the government annuities to which he’s entitled will only pay him $16,000 a year! Bye-bye beautiful retirement projects… in order to meet his financial needs, he will need $19,000 a year from personal savings – some 120% of the amount he’s getting from the government. Someone’s going to be in for a very unpleasant surprise unless those RRSP contributions are made!