Retirement Income Timeline

Before you start on your timeline, make sure you have a good idea of the types of assets and income streams that form the building blocks of your retirement income and how much income you expect to receive from each source. The types of periodic income streams you may have include:

• Part-time work
• Defined benefit (DB) pension payments
• Annuity payments
• Canada/Québec Pension Plan (CPP/QPP) benefits
• Old Age Security (OAS) benefits
• Rental income

These income streams are typically fixed on a monthly basis. They may not stop until you die, terminate your employment (with reference to part-time work) or sell your rental property (with reference to rental income).

Generating income from investment assets may not be as predictable. But you should also have a good idea of how much annual income you project to withdraw from your retirement assets. Types of retirement assets you may withdraw an income from include:

• Defined contribution (DC) pension account
• LIRA/LIF account
• RRSP/RRIF account
• TFSA account
• Other investments, such as a non-registered investment account
• Real estate, such as your personal residence, recreation property, and investment property

These assets are forms of investment accounts or other assets that you’re managing on your own, or with the assistance of a financial professional. The income that you draw from these assets may vary over time due to government regulations, market conditions and your personal needs.

Retirement Income Timeline

Your retirement income streams may not all start at the same time. For instance, you may choose to retire at age 60 and begin to receive income from your defined benefit pension but choose to defer receiving your CPP/QPP payments until age 65. Your age of eligibility for OAS may change, depending on the government in power.

Plan ahead and project how your income and expenses may change during your retirement years. Re-examine your projected retirement expenses. You can’t realistically estimate your income needs without knowing your expenses. Use the Current and Future Expenses worksheet to compare current and estimated retirement expenses.

Use the Retirement Income Timeline to plot the various start dates of your income sources. Estimate your income and expenses for each time period. If you have a spouse/partner, add in their income streams as well. View your results on an after-tax basis by subtracting the estimated federal and provincial/territorial tax payable. Use the federal-provincial/territorial tax rates table to estimate your average tax rate.

Tips

• Record your chosen retirement date.
• Plot the start date and amount of income from your various income sources.
• If you are retiring with a spouse/partner, don’t forget to include their chosen retirement date, income sources and expected start dates.
• The tax rates used are a blended average and may not reflect your actual tax paid. Use them as a guideline, to estimate your after-tax income.
• Note if there is a surplus or deficit of income versus your total retirement expenses at the age where specific income sources begin.
• Do you have deficits at specific intervals? If so, how do you plug the holes… perhaps by making withdrawals from your retirement assets, such as your RRSP or TFSA?
• Finally, include income from your retirement assets and note the impact.
• Model several scenarios, by changing such variables as your chosen retirement date, or start dates, for various sources of retirement income.

The Retirement Transition Timeline does not easily account for inflation and other variables that may impact your retirement income over time. It’s meant for illustration purposes to help you with your planning. For a detailed analysis, of your personal situation, you may want to ask a financial planner to complete a year-by-year retirement cash flow analysis. Most planners have access to planning software for just this purpose.