What you need to know about planning for retirement

In Canada, research shows that the average older family tries to make do with less than half the income of younger, working families. Avoid this by following some simple tips that will make planning for your retirement easier.

• Between 30 and 60, try to earn enough to support yourself and accumulate funds to live on later.
• The longer your money has to grow, the less you need to put away each year. Plan now for your retirement — it's in your hands.

• Make a list of all your assets, figure out your income needs at retirement and what your income resources will be.
• The goal of any retirement plan is to accumulate as large a fund of investment dollars as possible, with the ultimate goal of reallocating those funds into a mix of assets that will provide you with a steady income and some growth potential.
• At 2% inflation, however, the purchasing power of a pension drops by 50% after 20 years.
• To protect yourself against inflation, invest a portion of your retirement funds in growth assets — but only a portion.
• The majority of your funds should be invested in secure income assets to provide a reliable income base.
• The federal government sets a target level for your retirement needs of 70% of your present working gross income.

There are a few basic government pensions available to most Canadians.

1. Old Age Security is available regardless of whether you have worked in Canada or not. Most people over 65 who have been living in Canada for over 10 years qualify for a full or partial Old Age Security (OAS) pension. But you may also be entitled to other benefits.
2. The Guaranteed Income Supplement (GIS) is available to singles with an income lower than $13,464 a year or couples with less than $17,568 of income, excluding GIS and OAS. An allowance is available for spouses or common-law partners of GIS recipients if you are 60 to 64.
3. Canada Pension Plan (CPP) benefits are based on contributions you made through work. The CPP payment you receive monthly upon retirement will depend on both the age at which you retire and the dollar amount of earnings credited to your account. CPP rules allow parents to drop out of the workforce to raise a child for seven years, during which time CPP contributions are supposed to accumulate at a normal rate. If separated or divorced, a lower-income spouse can receive part of the pension benefits earned by a higher-earning spouse during their marriage.

• List your assets. Include income-producing assets, plus non-income-producing assets and assets that require expenditures for maintenance (house, car, etc.). Estimate total dollar value, factoring in appreciation.
• Figure out post-retirement income from assets, pensions, government.
• Calculate post-retirement expenses, then deduct costs stemming from work. Add on cost of benefits no longer covered by an employer. Estimate an annual dollar figure. Factor in inflation.
• If post-retirement expenses outstrip income, start liquidating assets.

• For general information on eligibility for pension benefits and monthly rates, go to the Social Development Canada website at www.sdc.gc.ca/en/isp/oas/oastoc
• To apply for a Statement of Contributions, go to www.hrdc-drhc.gc.ca), call 1-877-454-4051 or write to Contributor Information Management, Canada Pension Plan, P.O. Box 9750, Postal Station T, Ottawa, Ont., K1G 4A6
• For the Quebec Pension Plan, request a Statement of Participation by contacting Régie des rentes du Québec, Service des cotisants, P.O. Box 5200, Quebec City, Que., G1K 7S9

Don't wait until the last minute to plan for your retirement — start today with these easy tips and know your options. When it's time to retire, you'll be glad you started preparing early!