Top Free Retirement Calculators
Asset accumulation, generally speaking, is straightforward:
- Save money.
- Invest your money in mostly equities/stocks.
- Keep your fees low.
- Stay invested.
- Repeat 1, 2, 3 and 4.
Wake up wealthy over time. I mean, it’s almost…that simple.
Asset decumulation can be an entirely different matter – which is where some top free retirement calculators (and related sites) might help you out!
Read on to learn about resources that I like and have used in the past, in today’s post.
Top Free Retirement Calculators
There are many reasons why asset decumulation or retirement drawdown planning is challenging for many. Here are some top issues that come to mind that I’m starting to navigate and resolve in my own financial independence plan:
- The need to convert large sums of money into reliable and ideally, growing income streams to fight inflation.
- Changing economics (i.e., dirt-low interest rates where bonds will struggle with higher inflation).
- The desire to minimize taxation.
- The need to fight longevity risk.
Related Reading: Why would anyone own bonds right now?
Then there are some personal, specific questions to answer/consider:
- When to tap/access personal investment accounts such as your TFSA, RRSP or taxable account.
- When to take your workplace pension (if you are lucky enough to have one).
- When to convert your RRSP to a RRIF (Registered Retirement Income Fund).
- How any part-income income might supplement retirement drawdown efforts.
- When to take CPP benefts.
- When to take OAS benefits.
- When to convert your LIRA to a LIF (Life Income Fund).
- How long could your money last with X% withdrawal rate, with Y% inflation rate, with Z% taxation rate.
- And more and more and more….
In a world of increasing financial uncertainty, this makes the process of retirement drawdown planning and re-planning critical to stress-test your assumptions (long before retirement begins!) and to model the art of possible…
In planning for any retirement, even 5-10 years out is smart before you pull the trigger, I would recommend you continue to embrace key wealth-building blocks that got you this far:
- amount of savings that remains invested in equities/stocks for growth, and
- time invested.
Added together, money saved and time invested can continue to work its magic for your wealth-building favour.
Be very mindful however in any semi-retirement or retirement planning of the following wealth-killers:
- fees are forever (i.e., money manaegement fees paid to an advisor),
- taxation, and last but not least,
- higher inflation.
Any one of these things or all of these things combined can destory your wealth.
Before we get to some of my favourite, top free retirement calculators and related sites, here are some portfolio drawdown orders to consider:
Portfolio drawdown orders to consider
Depending on when you plan to retire or semi-retire like I might, the tax consequences involved, and much more, you can probably appreciate the drawdown order could be very different amongst retirees.
Here are some key ideas/sequences to consider:
1. NRT = Non-registered (N), RRSPs (R), TFSAs (T)
This sequence might work well if you have built up a modest taxable account value by your 50s or 60s and you might have higher income needs and wants in retirement.
To fight longevity risk, the idea behind NRT is you exhaust your non-registered account first, allowing tax-deferred money (RRSP) and tax-free investments (TFSA) to grow and compound away, potentially deferring CPP and OAS later in life.
Some reminders about our Canada Pension Plan (CPP):
- If you start before age 65, payments will decrease by 0.6% each month (or by 7.2% per year), up to a maximum reduction of 36% if you start at age 60.
- If you start after age 65, payments will increase by 0.7% each month (or by 8.4% per year), up to a maximum income boost of 42% if you start at age 70.
More reading: When to take your CPP benefit.
Old Age Security (OAS):
Your OAS pension can start as early as the month following your 65th birthday.
- If you choose to defer collecting your OAS pension to age 70, each month you defer your benefit increases by 0.6% for a total income boost of 36% over the age 65 amount.
I believe for most Canadians, it makes sense to take OAS at age 65 and if you are going to defer any government benefits, defer CPP to age 70 for the additional income boost.
Another reason not to defer OAS (vs. CPP) is there are no survivor benefits for OAS. This means take the money at age 65, and leverage any income-splitting options with other assets to reduce OAS clawbacks and maximize after-tax retirement income.
2. RNT = RRSPs (R), Non-registered (N), TFSAs (T)
In this RNT sequence, that essentially involves a slow drawdown of RRSP assets in your 50s and 60s first, you can smooth out taxes given any RRSP withdrawals are taxed as income. While the RRSP assets accruing in the plan are not taxed, you’re absolutely hit on taxes when money is withdrawn. In the year RRSP owners turn age 71, they must convert the plan to a RRIF or be taxed on the entire amount. Ouch.
The benefit of the slow RRSP withdrawals using an RNT order over many years, before age 71 conversion, is you can generate some aforementioned income splitting opportunities while being tax savvy with other personal accounts – keeping your TFSA “until the end”. (If you are the recipient of a pension and are 65 or older, you may split income from your RRSP, RRIF, life annuity, and other qualifying payments.) The challenge in preserving your RRSP/RRIF assets well into your 70s and 80s, if that some seniors could be subject to OAS clawbacks depending on their income level, paying more taxation that really ever necessary.
You may enjoy reading this post: Overlooking retirement income and planning considerations.
OK, enough on drawdowns and much more content to share on that subject over time for you!
Here we go, my top free retirement calculators to use and play around with.
1. Vanguard – Retirement Nest Egg Calculator
2. Government of Canada – Retirement Income Calculator
3. PERC (Personal Enhanced Retirement Calculator)
PERC stands for Personal Enhanced Retirement Calculator developed by LifeWorks (formerly Morneau Shepell), allowing Canadians to see how much income you could withdraw from all your financial assets.
There are some limitations with this tool: the target audience is really in the range of ages 50-80 and it is far from tax optimized. That said, you can include your spouse or common-law partner in your estimates and I like the fact you have some graphical representations of potential income spending throughout retirement. Overall, well done!
4. The Retirement Planner Calculator (Canadian)
This is a new tool is designed with some intuitive sliders to help you arrive at your desired retirement income plan. Using this calculator, you can view your retirement savings balance and your withdrawals for each year until the end of your retirement.
The cool thing about this tool is it accommodates general savings rates with ease – you don’t need to worry about TFSA, RRSP or taxable contributions – just pick the desired savings rate (e.g., 10%). It includes CPP and OAS calculations. Like PERC, it also delivers a free graphical representation.
Again, this is an individual tool so it does not include a spouse or partner very easily, although I suppose you could lump those values together and again, like other tools, it doesn’t help to demystify the tax picture very much.
Top Free Retirement Calculators Summary
There are other tools out there but these are some of my favourites – which is far better than sticking with any 4% rule.
Any proven path to a successful retirement should ignore the 4% rule.
I’m still working through my complete retirement drawdown plan but I do have some great ideas to keep my mind busy 🙂 I have no doubt I’ll write more about these over time and I would be happy to help you out.
Until then, I’m sticking with my asset accumulation plan and I suggest you do as well.
Are you a fan of FIRE? Try the FIRECalc early retirement tool.
When could you retire? Try out networthify.com.
How much do you need in the bank to retire on $5,000 per month starting at age 50?
How much do you need to retire at age 55 with higher inflation for next 40 years?
Can this single, 60-year-old ever retire on a lower income?
Don’t forget…I can help so you are welcome to hire me!
I also run Cashflows & Portfolios that can help answer retirement income planning and cashflow management questions.
Subscribe for free and hit me up if you want to take advantage of our low-cost services!
Thanks for your readership.
Great post, Mark. I have tried all of these calculators. One clarification. You say that the Government of Canada’s calculator does not include provincial taxes but I don’t see where it includes federal taxes either. Can you confirm that federal taxes are included in the results?
Thanks very much, Peter.
I would have to check for sure, but my understanding is that Gov. of Canada calculator, while decent, does not account for taxes (provincial or federal). So, while it’s good for income needs, take those income values with a grain of salt since that’s income before taxation – and we all spend money after-tax.
Any particular free tool your favourite? I would love to build one that offers the best of them all 🙂
Each one has strengths and weaknesses and I use several different ones as a “reality check”. There are a couple of others that you did not list that include Monte Carlo simulations, which I like. They are The Flexible Retirement Planner (https://www.flexibleretirementplanner.com/wp/planner-launch-page/) and Monte Carlo Retirement Calculator (https://www.retirementsimulation.com/). These are both US-oriented but are easily applied to Canada. Flexible Retirement Calculator is more granular and allows the user to include CPP and OAS as Additional Inputs.
Yes, I looked at those. I didn’t like them for mostly the U.S. bias but maybe I should include them here in the next version because they do offer some interesting analysis.
Have you also used this one? Too basic but the FIRE-crowd love it 🙂
And this one, for the simple FIRE-crowd:
I have used both of those. As you say, simple and basic…but better than no forecast at all.
Very much so! 🙂
Anyone try https://moneypages.ca/smart-planner/index
I have not, yet, thanks for the link Allen 🙂
I’ve spent years scouring the internet for free (and low cost) Cdn retirement planners. I’ve found that most are too simple or generic and don’t allow me to “tune” the projection parameters to the degree that I’d like. For example, I want to be able to control annual payouts from dividends in non-reg accounts for some years and then DRIP later on when other sources of income begin (RRSP, LIRA, etc.). I want to try withdrawing from RRSP during some years (but not others) before it turns to an RRIF, and I want to fiddle with my LIRA. I want to be able to manage eligible and non-eligible dividends from a CCPC. Not many free calculators allow that degree of flexibility. (There is a fabulous nominal-fee subscription based app that does all this, but I’m not sure if I can mention its name here.)
I eventually stumbled across a great little tool developed by Steven Brown (search Steven Brown Retirement Planning and Forecasting Spreadsheet) It’s an open source Excel spreadsheet that is quite sophisticated. It’s not simple, but if one is willing to put the effort into learning how it use it, it pretty thorough. The major downside is that it hasn’t been updated with current tax rates. But, if you’ve got time on your hands (as I do) and are proficient in Excel (as I am) then it’s not too too hard to modify the spreadsheet to do whatever you want (as I’ve done).
Thanks very much Schooner. I think that’s the thing – you can definitely build your own tools in Excel, other but for something quick and a bunch of estimates these tools can do the trick.
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Related question about withdrawals from rrsp early.
If you use the early withdrawal from your rrsp to get funds out at a lower tax bracket, you lose the benefit of compounding on the amount you have paid in tax. So, if you had a $1mm rrsp and remove say $50k per year at age 65 -71 you are paying tax early in order not to pay tax at a higher rate later. If you do this, you are prepaying about $15k of tax per year. If that money did not come out till death, say 85 and is taxed at 50% at that time, you end up paying 20% more in taxes but a have a higher amount in the rrsp due to compounding. I suspect that the difference is not as significant as we think.
Is paying more tax on a higher amount at death worse financially than paying tax on a lower amount now?
Also have to remember that you have changed any further income on the amounts withdrawn from the rrsp into either capital gains or dividend income (that will be taxed at a lower rate than straight income) and that will further reduce the tax liability.
Any thoughts or comments?
It’s a bit of a cat and mouse game Ken, for me, and I always come back to the reason why the RRSP is available.
It allows Canadians to save for retirement, on their own, tax-deferred. That’s it. So, whenever you take your money out, hopefully you are taking it out:
1. When you need the money, and
2. When you’re in the lowest tax bracket to mitigate taxation.
Your comment about taking RRSP $$ out early (e.g., ages 65-71 just as an example) is a good one since it’s either pay now (tax) or pay later.
Personally, for us, I prefer to spend my money when I’m alive, pay some tax, and enjoy what life has to offer while making my estate planning easy for my Executor. That means RRSP/RRIF money should be long gone by age 80 and likely just government benefits and a fat TFSA to deal with.
Also, in my book or head, non-registered assets can be taxed very favourably. In fact, in Ontario and in many other provinces, assuming you have little to no other income, thanks to the Canadian dividend tax credit there is zero tax paid on dividend income up to about $50,000. That’s per person. Pretty incredible when you think about that.
My take on early RRSP withdrawal is to start withdrawing in my lowest income years which is before I start receiving my DB pension. I’ve structured it such that we use it to fund both our TFSAs (compounding tax free) and the excess we try to spend on fun things.
Totally agree – take the $$ out of RRSP when you’re in your lowest income years, when you need the money, assuming you have other income streams in retirement. It’s a tax-deferred account. Nothing more and you (and I) will get taxed on any income.
Mark, broken record over here, but you missed another opportunity to point out to the “planning well for retirement” community that EITHER a RNT or NRT strategy allows for the REALLY good planners to makes the “T” optional! For people with modest spending habits (!), and decent incomes, savings and retirement plans, and who can comfortably plan to NEVER spend out of their TFSAs, the “T” becomes an entirely tax-free component of estate planning.
Our financial plan is exactly that and our TFSA investments look like we’re 27, not 60. The rest of our investments are more conservatively placed, but because our plan doesn’t ever require using TFSAs (short of disaster or policy change), they’re maxed out and 100% in equities.
Our testementary charitable giving will likely be very different than what we have in our living budget!
Excellent point William. 🙂
Those “really good planners” can be in the fortunate position to make any “T” = TFSA spending totally optional.
I support the TFSA being 100% equities, for long-term growth and estate planning. I captured your essence, I hope (?) in this post:
I appreciate your thoughtful comment.
I recently stumbled upon firecalc.app – simple entries, Monte Carlo simulations and selectable withdrawal strategies like 4%, 1/n, guardrails etc.
Check it out
Good stuff Tom. In my post for the desktop version.
I didn’t know where was an app?