How much should I be saving to have enough for retirement?
How much you need to save now to fund your future retirement depends on your desired retirement lifestyle. Your ideal retirement may be quite different from someone else's. Everyone is unique.
To start thinking about what your life in retirement might be like, use the BMO Take Charge of Your Retirement™ tool. It helps you think about: Who will you spend time with? What will you do? Where will you live? How might your health affect your retirement? Once you have an image of your life in retirement, you can start planning.
Step 1: Figure out what your retirement will cost
Determine how much monthly and annual income you will need to fund your ideal retirement. Use current expenses as a guideline and adjust for inflation by adding an annual increase of 2% to 3%. Remember that your money may have to last 20 to 30 years or more.
Step 2: Figure out how much you need to save
Crunch the numbers to find out how much you need to set aside starting now, based on a various growth rates. The more you can save earlier in your working life, the better, thanks to "the magic" of compound growth.
Step 3: Contribute regularly to your RSP
If you don't already have an automatic contribution plan for your Registered Retirement Savings Plan (RSP), start one. With automatic savings, you "pay yourself first" so you can stay on track.
Step 4: Review your plan and your progress regularly
Variables change over time. By checking in with your BMO Financial Planner, Investment & Retirement Planning* on a regular basis, you'll know exactly how your investment portfolio is progressing and feel confident that it will take you where you want to go.
To learn more about how much money you'll need for retirement, download our free report, "Saving for retirement: One size does not fit all," from the BMO Retirement Institute. For individualized help to reach your retirement savings goals, speak with a BMO Financial Planner.More questions?
* BMO Financial Planners, Investment & Retirement Planning, are representatives of BMO Investments Inc., a financial services firm and separate legal entity from Bank of Montreal.
