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Agnes is 40 years old. She wants to know how much she should be saving...

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Finance

Agnes is 40 years old. She wants to know how much she should be saving each year for retirement. Below are the specifics:

  • She wants to retire at 60 and expects to live until shes 90
  • She currently makes $45,000 and expects that to increase each year with inflation (2%). She thinks she will need about 70% of that to live on in retirement.
  • She has $40,000 in an RRSP
  • Her investments are earning a real rate of 7%
  • When she retires she will move her investments into a more conservative portfolio and earn 3% real returns per year.
  • She expects that CPP will be about $15,000 per year.'
  • How much does she need to have saved at the time she retires?
  • Given this information, how much will she have saved when she is 60?
  • How much will she have to save each year to make up the difference?

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