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One of the fastest growing trends in Canada is the aging population. There are more Canadians that are older adults than children and that number is expected to rise.
More and more Canadians, irregardless of age, are becoming affected by the increased cost of living. With that comes the fear of how they are going to save enough finances to retire.
This Padlet hopes to show how  to establish proper finances to retire comfortably.

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Picture 2-  The race for financial security 

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Picture 2-  The race for financial security 

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This picture highlights how the road to financial security can feel like. It starts with what you want (goals) and gradually you work way into it. It is good for illustrating how it is not a instantaneous solution or path, but rather a long road of being committed and dedicated to what you want in life. It also makes room for setbacks and adjustments.

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Picture 1- What are Canadians worried about?

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Picture 1- What are Canadians worried about?

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As this picture shows majority of Canadians are being increasingly aware of the increase of cost of living above anything else.  Surpassing even family members health.
Some of the fears or concerns can be eliminated with establishing a good financial plan. By doing some of the tips provided in the articles on this Padlet can help alleviate the stress financially.
I chose this picture because provides a visual on how many people are affected.

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Video 2- Achieve Financial Freedom through 7 steps 

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Video 2- Achieve Financial Freedom through 7 steps 

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This video  goes over 7 simple steps towards gaining financial freedom.  These steps go over accepting money positively, establish goals,  constantly learning about finance and money,  establish what worked and didn't work.  What surprised me about this video is that one of the steps is to be kind and generous to friends and families.
I chose this video because he establishes early on that you don't need to make an abundance of money to be considered financially free- it comes down to discipline and motivation. He also discusses how money doesn't necessarily make you happy.

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7 Steps to Achieve Financial Freedom | Brian Tracy

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1. What did you learn about your topic that surprised you the most?
I was shocked to learn that you have to apply for C.P.P. also how little and taxable it is. I always assumed it got mailed to you once you retire and it was a decent amount.
2.  Provide a real life example of how this topic is relevant or interesting for you.
My parents have always encouraged financial security, and stressed the importance of retirement funds. As soon as I was 18 my parents had a financial adviser come over and discuss setting up a plan i can contribute to.
This is also one of my financial goals; when I retire, I want to retire comfortably. This research is helpful for me to get started and learn some tips and tricks.
3. If you could pass on your knowledge to a family member or friend, what do you think is the most important thing to pass on?
One of the things I would pass on is limit or stop the credit card usage. Most articles stresses to limit their usage to online or out right don't use them. Through personal experience, not only does it leave you vulnerable to being hacked but using it adds up.

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Video 3 - Make room for an Emergency Fund 

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Video 3 - Make room for an Emergency Fund 

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This video goes over how  creating and establishing emergency funds  can help cover various expenses that pop up. It also talks about 2 essential emergency funds - rainy day and emergency savings. Doing this will prevent last minute scrambling and having to put it on your credit card.
I chose this because it goes over the 2 types of savings. Realistically, how many people people freak out over a sudden expense or panic over not having a job? Being financially stable doesn't just involve not worrying about money, its more about being able to handle the unexpected.

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Money 101 | Emergency savings: How to protect your future financial security

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This website focuses on establishing different rules of thumb to save or ensure you have enough for retirement. These include the x 25 rule, this is where you determine how much you are planning on withdrawing each year and multiplying it by 25.  This way you can determine how much you need  to save for and how long you are able to last without working. In this case it is assuming you are going to be retired for 25 years.

A lot of considerations for retiring involves deciding how much you need and what you can live on.
While there are guidelines and hints, there is often no definite answer for what you need to retire, as what you deem a "need"  may be a want for some one else.

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In the retirement series, I wrote about the Canada Pension Plan, RRSPs, Old Age Security, and other employment pension plans.

Taking it a step further, I want to address a question I've often asked myself (and have been asked by others):
"How much money do I need to have saved up before I retire?"
"At what age can I retire - at 50, 55, 60 or 65 years old?"
"How much income will I need in retirement?" ... or more specifically: "How much money do I need to retire in Canada?"
These, of course, are important questions!

As you grow older, you start to wonder if you're putting aside enough money for retirement and if your retirement nest egg will hold up when you finally do retire. While I do not have all the answers, I'll take a stab at providing an answer that hopefully gets you started on the road to arriving at the "magic number" or "multiple" that works for you.

Retirement Income Calculation - Rules of Thumb

When it comes to income required in retirement in Canada, there are several rules of thumb or schools of thought out there. If you are looking for a definite answer to put your mind at rest, you may be disappointed.

In fact, the one thing everyone readily agrees to is that when it comes to retirement income, it is not "black and white" and there is no 100% consensus.

Rule 1: 4% Withdrawal Rate

The 4% withdrawal rule infers that you build up a retirement portfolio that provides a certain amount of income to you per annum at a 4% or so withdrawal rate. A 4% withdrawal rate is often referred to as a "safe" withdrawal rate.

For example, say you have figured out that you need $40,000 per year in retirement. Using a withdrawal rate of 4%, you should have a minimum of $1 million in retirement savings before you retire.

This rule of thumb works whether you plan to retire early at 35 or go the conventional route and retire at 65 years or later. It's the strategy often utilized by many "early retirement" enthusiasts or the movement popularly referred to as "FIRE" - Financial Independence/Retire Early.
Note: For earlier retirement plans, consider that you will not be receiving a government pension or retirement benefits until later in life and adjust your income needs accordingly.
The general idea behind the funds lasting you for life is based on historical market returns. If we assume your investment portfolio generates approximately 7% annually in long term returns, then real returns of approximately 4% are expected after accounting for inflation (assuming an inflation rate of 3%).

Essentially, a 4% withdrawal rate assumes your investment portfolio is not highly conservative (i.e. you are invested in a good proportion of stocks/equities).

Rule 2: Desired Annual Retirement Income x 25

This rule follows from the 4% withdrawal rate rule. They are pretty much the same, but easier to calculate for those who would rather not dabble in fractions. It infers that in order to meet your income needs in retirement, you want to have at least 25 x your desired annual retirement income.

For example, say you estimate that your expenses per year in retirement is $40,000. You would be expected to save up a minimum of $1 million in retirement savings.

Related: The Complete Guide to Retirement Income in Canada

Rule 3: 70% of Working Income (or more)

This rule estimates that you will need between 70% and 100% of your pre-retirement income in retirement: 70% if you are typical and do not have a mortgage, and up to 100% if you are still paying a hefty mortgage plus other atypical expenses while retired.

The idea behind this rule is that your expenses are generally expected to be lower in retirement: no mortgage payments, no longer need to save for retirement, kids are financially dependent, etc. After computing this amount, you can then proceed to calculate how much you need (lump-sum) by going back to Rule 1 or 2.

For example, assume you earn $100,000 per year before retiring. Using the 70% rule, you will need approximately $70,000 ($100,000 x 70%) in annual income to maintain your lifestyle in retirement. Going back to Rule 2, it implies you need:

⇒ $70,000 x 25 ⇒ $1.75 million in retirement.

I think the 70% rule is a fairly liberal estimate of retirement income needs (barring exceptional circumstances). A survey conducted by Sunlife and released in 2016, shows that Canadian retirees were on average living on 62% of their pre-retirement income.

Rule 4: Pre-Retirement Income x Multiples of 10 to 14

This rule suggests that you can calculate how much you need to save for retirement by multiplying your income just before retirement by a number between 10 and 14.

For example, say your income before retirement was $100,000/year. Following this rule, you should accumulate at least (depending on which multiple you're working with):

Multiple of 10: $100,000 x 10 = $1 million

Multiple of 11: $100,000 x 11 = $1.1 million

Multiple of 12: $100,000 x 12 = $1.2 million

Multiple of 13: $100,000 x 13 = $1.3 million

Multiple of 14: $100,000 x 14 = $1.4 million ... during your working years.

Rules 3 and 4 implicitly assume that you are using the income earned during your highest income-earning years as the basis of your calculation. This means that if you are a younger person in an entry-level position (i.e. low starting salary) who is looking at retiring early, calculations using these approaches will not work for you in the longer term.

Related: CPP vs. OAS: How Do They Compare?

Estimating Your Retirement Income Needs in Canada

The income available to you during your retirement years (distribution phase) will depend largely on how much you were able to set aside during your working years (accumulation phase), plus other available government and employment benefits.
Steps to estimating your retirement income needs include:
A. How much income do you expect to live on per year?

You can choose to compute this amount using different strategies - for example, by using the 70% pre-retirement income rule, or by simply looking at the lifestyle you envisage living in retirement and estimating what your expenses will add up to (including taxes).

Note: In your calculations, if looking at your current lifestyle and expenses, remember to eliminate expenses that may no longer be relevant in retirement such as mortgage payments, cost of commuting to work, childcare expenses; RRSP, CPP, and EI payments, etc. And, remember to add new expenses that may crop up such as travel expenses, hobbies, health issues, and so on.

B. How much government benefit do you expect to receive?

If you have lived and worked in Canada before retirement, you can expect to receive Old Age Security (OAS) and Canada Pension Plan (CPP) benefits. The amount you receive will generally depend on how long you have lived in Canada (for OAS), how much you have contributed to the plan and for how long (for CPP).

The maximum monthly OAS payable in 2019 (April to June quarter) is $601.45 for a total of $7.217.40 per year, while the maximum CPP is $1,154.58 for a total of $13,854.96 per year (2019). Most people will get less than the maximum amounts. For example, the average monthly CPP benefit received in 2019 is $723.89 (37% less than the maximum amount).

For individuals who immigrated to Canada in their adult years (like me), the total government pension they will be eligible for will be significantly reduced.

Using the maximum government pension amounts as an example, total payouts from this source to a single senior is:

C. How much do you need to save up?

To calculate this amount on an annual basis, you will need to subtract expected government pensions from the annual expenses you calculated in Step A, and then multiply the remainder by 25 (or divide by 4%).
For example, for a couple who estimate their annual retirement income needs to be $70,000:
a. Most individuals will not get the full government pension amount from OAS and CPP. The amount here reflects 70% of the maximum CPP amount for a couple in 2019 (i.e. 70% x $21,072.36 x 2) - moderately conservative estimate.
b. Line 1 minus line 2
c. Derived by multiplying the annual income withdrawn by 25 (i.e. $40,499 x 25) or dividing by a 4% withdrawal rate (i.e. $40,499 / 4%). The result is the same for both formulas.

As shown in the table above, government pensions offset some of the savings required by the couple pre-retirement. The more government pension they qualify for, the less money required in their investment portfolio.

Additionally, if one or both partners have a defined benefit pension, it will further lower the amount of savings required to meet their desired retirement income.

Related: CPP and OAS Benefits for Surviving Spouse and Children

What Can Change Your Retirement Income Needs?

Calculating your income needs in retirement is not an exact science. Life happens and it may leave your retirement plan in tatters. Some possibilities include:

Health issues that cause you to retire earlier than planned or which result in higher-than-expected medical bills early in retirement

Financially dependent kids in retirement

Divorce

Significant mortgage payments

Run-away inflation or a market crash, and much more.

If for one reason or the other, you are unable to save enough money for retirement at age 60, or 65, or earlier depending on what your plans were initially, the following strategies may be useful in managing your "savings/income gap":
1. Work for longer and delay government pension till later: Working for a few more years and/or delaying when you start receiving OAS/CPP can significantly increase your eligible payouts down the road.

2. Semi-retire and work part-time: Every year you delay dipping into your retirement nest egg means more money to spend in the future.

3. Start saving aggressively: The earlier you start saving, the better for you. Time is the game-changer when it comes to the returns you are able to earn on your investment portfolio. If you are running out of time, you will need to put aside more funds more often.

4. Consider adjusting your retirement lifestyle expectations and spending less: If you have run out of time to build an adequate retirement portfolio to pay for the lifestyle you desire, you may have no choice but to take out less money from your savings and live accordingly.

5. Downsize and sell your home: You can consider beefing up your retirement savings by downsizing and selling your home so as to utilize the equity you have built up over the years. Alternatively, you may consider taking out a home equity line of credit (HELOC) or a reverse mortgage.

6. Other Government safety nets: If your income in retirement puts you in the low-income bracket (as specified by the government on an annual basis), you may qualify for additional government benefits, including the Guaranteed Income Supplement (GIS) or the Allowance.

Some resources that may come in handy as you plan for retirement include those provided by the Canadian Life and Health Insurance Association and this Retirement Calculator.

BONUS: Lower your investment fees with Canada's most popular robo-advisor, Wealthsimple. My readers get to invest up to $10,000 FREE for 1 year. Get Started here!

Other Great Retirement Investing Posts:

Closing Thoughts

When it comes to your retirement planning in Canada, starting early is the key. Compounding interest is your best friend, and it's better to be over-prepared than under-prepared.

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How Much Money Will You Need In Retirement?

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In the retirement series, I wrote about the Canada Pension Plan, RRSPs, Old Age Security, and other employment pension plans. Taking it a step further, I want to address a question I've often asked myself (and have been asked by others): 'How much money do I need to have saved up before I retire?'

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Website #1 You can save even on a small income 

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Website #1 You can save even on a small income 

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Even if you don't have a lot of money to spare you can still do something that will not only help you financially but also contribute to establishing stability. Some tips this article goes over is staying withing your means, getting rid credit cards and trying to save anything helps.
I chose this because many of the class are students and thus a few may relate to living paycheck to paycheck. This article goes over how even if you are struggling you can still prepare and work towards being financially stable.

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How to Save for Retirement in Canada on a Small Income | My Money Coach

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A common concern for many Canadians is how to save for retirement in Canada, especially when we're living paycheque to paycheque. If we're struggling to make ends meet now, how will we take care of our expenses when we're no longer earning the same income we used to?

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Website 3 - The Government does have a Pension Plan for citizens 

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Website 3 - The Government does have a Pension Plan for citizens 

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The Canadian Government provides all senior citizens additional income for when they retire. This money comes from contributions you made while you were working prior to retiring.  However, it is not automatic and you must apply for this in order  to receive funds.
This article is good because it lets you know how early you can plan to retire - 70 for the most benefits. It also goes over how long it takes for your application to go through. This also mentions and provides links for other benefits some people may be eligible for.

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The Canada Pension Plan (CPP) retirement pension is a monthly, taxable benefit that replaces part of your income when you retire. If you qualify, you'll receive the CPP retirement pension for the rest of your life. To qualify you must:

be at least 60 years old

have made at least one valid contribution to the CPP

Valid contributions can be either from work you did in Canada, or as the result of receiving credits from a former spouse or former common-law partner at the end of the relationship.

You must apply

CPP payments are not automatic. You must apply. You should apply in advance of when you want your pension to start.

Our goal is to pay your CPP retirement pension in the month of the start date you choose.

Pension amount

The amount you receive each month is based on your average earnings throughout your working life, your contributions to the CPP, and the age you decide to start your CPP retirement pension. Your contributions to the CPP are based on your earnings.

The standard age to start the pension is 65. However, you can start receiving it as early as age 60 or as late as age 70.

If you start receiving your pension earlier, the monthly amount you'll receive will be smaller. If you decide to start later, you'll receive a larger monthly amount. There's no benefit to wait after age 70 to start receiving the pension. The maximum monthly amount you can receive is reached when you turn 70.

There are different factors that can affect how much you'll receive, such as time taken off from work to care for young children. Find out more about how much you could receive. You can also work while receiving a CPP retirement pension.

How long will it take to process your application

We begin to process your application once we receive your completed application form. You should receive a notice of our decision by mail:

within 28 days for online applications

within 120 days for applications delivered at a Service Canada Centre or sent by mail

It could take longer to process your application if Service Canada does not have a complete application.

You may also qualify for other CPP benefits

In addition to the CPP retirement pension, you may also quality for other CPP benefits listed below. Like the CPP retirement pension, you will need to apply for these benefits (except for the Post-retirement benefit if you already receive the CPP retirement pension).

CPP enhancement

As of 2019, the Canada Pension Plan (CPP) is gradually being enhanced. This means that today's workers, the seniors of tomorrow, will have higher benefits and greater financial stability through a small increase in the amount they contribute to the CPP.

The CPP enhancement only affects those who work and contribute to the CPP in 2019 or after.

The enhancement adds 2 additional components to the CPP. These components are not a separate benefit, but a 'top-up' to the base CPP.

The CPP now consists of:

the base (or original CPP)

the first additional component, which was phased in between 2019 and 2023, and

the second additional component, which will be phased in between 2024 and 2025

The CPP enhancement will increase the amount working Canadians receive in the:

CPP retirement pension

Post-retirement benefit

Disability pension

Survivor's pension

It will not affect eligibility for CPP benefits. Learn more about the CPP enhancement.

Frequently asked questions

Document navigation

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Employment and Social Development Canada

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The Canada Pension Plan (CPP) provides contributors and their families with partial replacement of earnings in the case of retirement, disability or death.

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Video 1 - How much does the Government of Canada Give you? 

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Video 1 - How much does the Government of Canada Give you? 

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This video breaks down, how much you receive, where it goes and the different categories there are. These include C.P.P, O.A.S and G.I.S.   She also mentions that the original system of being with a company for 35 years guaranteed financial stability and good retirement money is no longer viable.  People coming into the workforce or starting out will have to create on their own a reliable source of income upon retiring without running out of money.
This is a good visual, audio learning video on what types of accounts you need/ will get for retirement.

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Retirement Income in Canada | Karen Chang

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Website 2 - How to achieve financial security 

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Website 2 - How to achieve financial security 

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This article includes 7 tricks that any one can do at any stage of life or financial status. These include paying off debts, eliminating emotional spending.This helps establish financial security through knowing where your money comes from and eliminating debts.
I chose this article because many of these steps students can do -such as getting a side job or cutting down on emotional spending. We also as a class went over creating budgets.

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Northwestern Mutual recently reported what by many accounts appears to be good news on the financial front for average Americans.

The company's 2019 Planning & Progress Study, which focuses on Americans' attitudes about money and financial decision-making, as well as their opinions about the "attainability of the American dream," found that 71% of Americans feel financially secure today versus 47% when the study was first conducted a decade ago.

Those figures represent a deep change in the attitudes and outlook of Americans since 2009 when the Great Recession ended, according to the study's authors.

But what if you're one of the people who still doesn't feel financially secure and isn't experiencing the current wave of optimism and prosperity?

What can be done to change that reality and help establish financial security - or at least set you on the path toward achieving that goal? We asked financial experts to share some of their top tips and suggestions.

Tip 1: Put a Practical Budget in Place

Your first step toward achieving financial security is to establish a monthly budget that you'll be able to live with, said Brian Walsh, manager of financial planning at SoFi.

"By creating a plan that you can stick to, you'll feel more confident and be better able to save for the future," explained Walsh. "We recommend the 50/30/20 rule for budgeting. You should be spending 50% on essential expenses, 30% on discretionary expenses, and allocating 20% towards your (savings) goals."

Tip 2: Create an Emergency Fund

Once you've developed a manageable budget, your next step should be establishing a savings account that can be used for emergencies, SoFi's Walsh said.

"Having enough cash on hand to cover unexpected expenses is one of the quickest ways to reduce financial stress and feel more secure," he explained. "Conventional financial wisdom suggests having about three to six months of your living expenses saved for an emergency. Sometimes that number scares people, so start with at least one-month worth of expenses. This money should be readily accessible should anything happen."

Personal finance experts recommend putting about 10% of your monthly income into such an account, adds Katie Ross, education and development manager for American Consumer Credit Counseling (ACCC).

" If money is tight and you aren't in a position to put the recommended 10% of your net income into savings, then start small. Even $10 or $20 a month will add up after a while," Ross said.

It's also a good idea to look for a high-interest account for your emergency fund, which can help you accumulate money more quickly.

Online savings accounts often offer higher interest than brick-and-mortar banks, with rates ranging from 2.15% to as much as 2.52%. Some of the top high-yield choices, according to Bankrate, include Marcus by Goldman Sachs, State Farm Bank and TIAA Bank.

Tip 3: Consolidate Debt

If you're working toward eliminating debt but have those debts spread out amongst a variety of high-interest loans or credit cards, consider debt consolidation.

Consolidating high-interest rate accounts via a single personal loan, which often allows you to lock in a lower fixed interest rate, can save you money over the course of the loan, said Walsh.

Want to further speed up debt reduction (or savings accumulation for that matter)? Take a look at your belongings and identify items you're willing to get rid of and begin selling them to earn some extra cash, suggests Deacon Hayes, founder of WellKeptWallet.com.

"Several years ago, my wife and I came to the realization that our finances were a wreck and we definitely did not feel financially secure, said Hayes. "There are several steps we took to turn our finances around. We sold tons of our personal belongings and assets. From our brand-new car to lots of other household items, you name it, we sold it and used the money to pay off debt. You can do the same thing to reduce your debt and become more financially free."

Tip 4: Eliminate Emotional Spending

Emotional spending is the money you fritter away on your wants and desires rather than your needs. In other words, it's the type of spending that's not typically budgeted and can get you into financial trouble.

"Whenever you spend money, ask yourself whether you want it or you need it and you will get a clear answer," explained Rishit Shah, who runs the online financial education platform Tally School.

The main goal, said Shah, is to reduce spending on wants because they're almost always liabilities that increase your bills over the long term.

To help with this effort, Chris Smith, founder of the personal finance site I Am Net Worthy, suggests allocating a specific amount of money each month for limited discretionary spending, and don't go beyond that amount.

"After separating your bills, savings and other additional costs, make sure to have a specific amount of spending money that you allow yourself to use on things you'd like for your personal preference," Smith said.

Tip 5: Find Ways to Increase Your Income

To speed up the financial overhaul in their household Hayes of WellKeptWallet.com, took a second job to bring in extra money and pay off debt.

"While delivering pizzas wasn't the most glamorous job, it gave us the extra money we needed to reach our goal of becoming financially secure," Hayes said.

Are you a good writer, photographer or graphic designer? Perhaps pick up some freelance gigs on the side to boost income. These are just a few examples. Identify your skills and use them to bring in extra cash through a side hustle.

"Focus on how you can increase your earnings and you'll become financially secure faster," said Shah.

Tip 6: Start Your Retirement Planning

If your employer offers a 401(k) match and you aren't contributing to your retirement account, that's free money you're missing out on, ACCC's Ross said.

"Many Americans do not feel prepared for retirement, but contributing to a 401(k) is an easy way to get started," she explained. "If your employer doesn't have a 401(k) plan, consider opening a Roth IRA and putting away a little money each month."

Even if retirement is still decades away, now is the time to start contributing to a retirement savings account so that your money has time to grow. Creating such a fund will help establish long-term financial security, added Ross.

Tip 7: Stay on Track by Setting Goals

Finally, to keep yourself on the right path, identify annual financial goals, including savings targets, that will help you stay motivated. But make sure the goals you set are reasonable based on calculations you've made, said Walsh.

"Use your successes to fuel further successes," Walsh added, but also recognize that, at times, unexpected expenses may pop up that are out of your control.

"When that happens, don't beat yourself up," he said. "Accept them as a normal part of life and be glad they've come up after you've created an emergency savings account to address them.

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7 Tips to Achieve Financial Security - The Simple Dollar

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Northwestern Mutual recently reported what by many accounts appears to be good news on the financial front for average Americans. The company's 2019 Planning & Progress Study, which focuses on Americans' attitudes about money and financial decision-making, as well as their opinions about the "attainability of the American dream," found that 71% of Americans feel financially secure today versus 47% when the study was first conducted a decade ago.