How much money will you need in retirement?
By Jim Middlemiss • Bankrate.com

As a general rule of thumb, you should strive to put aside enough to match two-thirds to 70 percent of your current income. "It's always difficult. Everybody has a different game plan," says Matifat.

Get rid of your debt sooner rather than later
One strategy that should be central to all retirement strategies is to get rid of debt as soon as possible, including your car loans and mortgage. Interest payments on such big-ticket items are non-deductible for most Canadians and can eat up a sizable portion of one's take-home pay. "All of those non-deductible expenditures come with high figures," says Matifat.

Once debt's out of the way, you can make headway topping up your RRSPs if you have the necessary contribution room or begin saving in a non-registered account.

A recent survey by the Canadian Financial Planners Standards Council shows Canadians are slipping when it comes to saving for retirement. The survey of 750 English Canadians between the ages of 18 to 75 found the average net worth of adults was $235,400, down from $282,000 in 1999. About 69 percent had an RRSP, down from 74 percent in 1999, and 53 percent had investments outside an RRSP, compared to 59 percent four years ago.

It raises concerns whether most Canadians are saving enough. According to Statistics Canada, a typical family with two working parents earns $70,814 before tax. Assuming they need 70 percent of that in retirement, they need $49,570 a year or $4,130 a month.

You'll need more than just your government pension
The Canada Pension Plan (CPP) provides a portion of that up to a maximum of $801.25 a month per person based on your contribution to the plan. That would provide our couple with a combined monthly income of $1,602. And you could get the Old Age Security (OAS) supplement, which provides a maximum of $461 a month per person, or another $922 per couple. However, that benefit is subject to an earnings-based claw-back. Besides, there's no guarantee it will be around when the bulk of the baby boomers hit retirement between 2015 and 2026.

Even so, government pensions still leave a monthly deficit of more than $1,600. To finance that, an investor would require around $400,000 in savings earning 5 percent annually.

But, like Matifat says, each person's case is different. A number of organizations and financial institutions have created retirement calculators to help you figure out how much you'll need. Keep in mind that some take inflation into consideration while others don't.

Use online calculators to get a handle on retirement needs
Human Resources and Development Canada (HRDC) has created a sophisticated retirement calculator. Have your pension statements or estimates handy as this calculator takes things like OAS and CPP income as well as your RRSP savings into consideration.

Rose, a 40-year-old working mother, has an average income of $35,000. She has no pension but has saved $50,000 in RRSPs and plans to contribute $3,500 a year earning an estimated seven percent return. The HRDC calculator assumes a three percent inflation rate. At 65, her combined income from RRSPs, CPP and OAS will amount to $32,000 annually, about 92 percent of her current income.

Contrast that to Ed, a 45-year-old executive who earns $100,000. He currently has $200,000 in RRSPs and contributes $10,000 annually. He can expect annual income of $73,000 at retirement, about 73 percent of his salary.

The Bank of Canada has its own investment calculator. It allows you to calculate returns based on how much you currently have invested, taking inflation into consideration. So someone with $110,000 in savings today earning seven percent annually with a two percent inflation rate would have $260,000 by 2020.

For those who prefer more of a worksheet approach, the Fiscal Agent, a financial services firm, has a different type of retirement calculator. It features a five-step process based on The Pension Puzzle by personal finance author Bruce Cohen.

The thing to remember about retirement calculators is they require you to make certain assumptions, such as your investments' rate of return and the impact of inflation, so your results will never be exact You should also keep in mind that most calculators can't calculate the tax impact if your investments are outside your RRSP, so you'll have to figure in those calculations yourself.

Nonetheless, retirement calculators provide you with some food for thought and can help map out the basics of how much you need to set aside. In the go-go 1990s, financial advisers were quick to say you needed that magic million in capital earning 10 percent for a comfortable retirement. That would generate $100,000 per year, an income only a small percentage of Canadians actually attain.

So temper your expectations, and watch your expenses closely. The better control you have on expenditures, the less cash you will need to finance your retirement.

Jim Middlemiss is a freelance writer and lawyer based in Toronto. He's a frequent contributor to National Post, Investment Executive and Wall Street and Technology.