Step 1: Formalizing your current expenses
In order to plan your retirement properly you will have to list your expected expenses in the Sources of Expenses section of the Retirement Budget Estimator.
Required tools: You will require the following tools available within the InvestingForMe Tools section:
Begin by completing the Sources of Expenses section of the Retirement Budget Estimator. The expense amounts that you have listed in your Household Budget should be transferred and listed in the first column of the Retirement Budget Estimator under the Year heading. Under this Year heading, identify a year for your retirement to begin. (Leave completing the Sources of Annual Income until you have completed steps one and two.)
Note: The Retirement Budget Estimator also provides you with two additional columns for exploring different retirement alternatives, or you can use these to estimate your retirement setting at two additional points in time.You may find that your income and expenses change at different stages of your retirement. For example, if you retire at age 57, you may need to use a portion of your accumulated savings to support your retirement until you are eligible for the Canada Pension Plan payments at age 60 and you become eligible for Old Age Security Payments at age 65. If this is the case, you may want to have your Projected at Retirement column titled Age 57 and the next two columns titled Age 60 and Age 65 to estimate how your retirement stage will look at those points in time. Another example of how the alternative columns can be used relates to your retirement spending. Maybe you want to enjoy most of your traveling adventures in the first five years of retirement, then by using the alternative columns you can map out how your expenses will look during and after your high travel time frame and plan where to obtain the income needed.