If you use a formula or guideline to estimate your target for retirement income, be sure to consider:

·   Is my income today higher or lower than average? For instance, someone making $200,000 a year may not need even 60% of that income after they retire. A person who is only making $25,000 may need 80% or more.

·   Do I share my income with anyone else? A $60,000 income would go farther for one person than for two people who live together, depending on lifestyle. On the other hand, a couple who lives together can share costs, so they may need less total income than two people who each live alone.

·   Will I have any debt when I retire? If your income is $45,000 and you have no debt, you can live more comfortably than someone with the same income who owes a lot of money.

·   Where will I live? Some costs will be higher in a big city, such as housing and property taxes. Transportation costs may be lower if you don’t need a car to get around.

Example: In Canada, an average family makes $65,000 while working. If they aim to have 60-80% of that amount after retirement, they will need between $39,000 and $52,000 each year to live comfortably. People who choose to live in a big city like Toronto may need more, but not always. Use our quiz, based on Statistics Canada research to find out what kind of lifestyle you may lead after you retire and how much money you might need to sustain it: What’s my retirement lifestyle?

Tip: Don’t forget about rising prices. Any estimates you make are based on how much a dollar buys today. So if you’re not actually retiring for a number of years, the amount you will need will go up because of inflation.

Remember:  Don’t wait until you retire to start planning your finances.

That way, you’ll have time to adjust if you need to increase your savings, or cut down on your costs so that you can live more comfortably.