Save for the pension years IT CAN sometimes come as a shock to discover that retirement is only a few years away. Suddenly, the company pension and savings that were to provide retirement security, no longer look so generous. Nobody vacations in Florida on an Old Age Security pension. The most fogical and psychologically reassuring step is to sit down and figure out precisely what you do need to save between now and retirement. Then you can set appropriate savings goals. How much will you need as an- nual income when you are retired? Many people assume they will need ~ far less money than they do when they are working. But what are you going to do with all your spare time? Do you plan to travel, take up a hobby, fix up the house? That takes money. You may need as much money retired as you did when you were working. BUDGET Take a pencil and paper, and work out a budget based on your present expenses. Remember to in- clude your spouse in your calcula- tions. . You may subtract items that will probably not figure in your retireinent expenses, such as a teenager’s food and clothing, but it makes mo sense to cut expenses such as entertainment -—- if anything, you'll have more leisure time to enjoy yourself. You must also count on taxes. If you need, for example, $25,000 a year to live, you must add to that your expected tax burden. What do your calculations add up to? Take this figure and project it forward to your retirement by allowing four to five per cent per year inflation. A compound interest table, available in bookshops and in some financial planning books, will make this task easier. If you need $25,000 a year now, you will need $41,000 in 10 years, assuming 5 per cent annual inflation. This represents your yearly in- come requirement for the first year of retirement. As you grow older, inflation will likely raise your cost of living, as will your old age: medical care, help for chores you can no longer perform yourself, etc. How much income can you count on? Add up your expected pension, regular investment in- come, government pensions such as Old Age Security and Canada Pension Plan, and other sources of income such as rental property. GET FACTS Get facts, as estimates tend to be overly optimistic. What is the dif- ference betweeil what you'll have and what you need? You would likely bridge this gap with income from a_ Registered Retirement Savings Plan. Find out from your life in- surance agent how much would be needed to purchase annuity income that would cover that gap. That will give you an idea of how much you must save as a minimum. However, you must also provide for inflation and rising costs as you age. If you can possibly save enough to provde for a Registered Retirement Income Fund, which provides income that increases each year, you should plan for this as well. How much do you need to save every year to achieve this sum? You can make this calculation us- ing an accumulation table — also available in bookshops or in some financial planning books. To save $20,000 in 10 years, for example, at a compound interest rate of 10 per cent, you would need to set aside in your RRSP about $1,550 a year. These calculations are, of course, far simpler to explain than to perform, But if you are the least bit concerned about your retire- ment financial security, it is worth your peace of mind to make the effort. goto your heirs. Annuity capital forfeited. A final advantage to your RRIF: the capital left in your account, should you die before age 90, will N INTIMATE. PERSONAL SERVICE HOTEL IN A UNIQUE WATERFRONT SETTING, We are now accepting reservations for accommodations, banquets. 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