Retirement Calculations - Part III

Well now that I determined how much money I’m getting out of the government, my work pension and RRSP’s. I have one last source of cash to fund my retirement: taxable accounts (or investment accounts outside of an RRSP).

To determine how much I need to retire by 45 I just have to do a few simple calculations. First off from 45 to 55 I’m only using RRSP’s and taxable accounts. So for ten years I need to make up $20,500/year with my taxable account.

Then from 55 to 60 I’ll be using my company pension, RRSP and taxable accounts. So I will only need $9,100/year for those five years. That brings me to a total of $250,650 in my taxable account to allow me to retire at 45.

Ok, that does look like a lot, but I do have some time to save it up. So if I save $550/month at 6.5% interest for 16 years I should have $196,215.

So I’m a bit short as it stands now. I have a few options:

1) Save more. This might happen as I get older if my salary increases out pace inflation.
2) Work during early retirement and earn $5000/year from 45 to 55. That would offset about $50,000 off my quarter of a million requirement and it would only take a day or two a week to earn that kind of income. So I’ll consider that.
3) Downsize the house and pocket $50,000. That will depend on the local housing market at that time.

I have yet to decide what I’m going to do, but at least I have an idea of where I stand. As I get closer to my goal I should be able to improve these estimates with my personal rate of return on investments and pension projections.