Section 8 – Retirement Assistance Programs

Section 8 Introduction

The purpose of retirement assistance programs is to provide individuals with financial independence based on their desired lifestyle when they retire, by complementing public retirement savings plans (see Section XII). Given today’s longer life expectancies, individuals must plan for and invest increasingly greater amounts to cover longer retirement periods.

Tax measures generally allow investment income to accrue in certain tax-sheltered plans. Accordingly, it accrues more quickly at very attractive rates. This becomes even more attractive if the taxpayer starts to save for retirement at a very early age as can be seen in the following table:

Starting age Total investment ($5,000/year until age 65) Portfolio value at age 65
4% return 6% return
25 years $200,000 $494,133 $820,238
30 years $175,000 $382,992 $590,604
40 years $125,000 $216,559 $290,782
50 years $75,000 $104,123 $123,363

Tax-assisted retirement saving measures are the same federally and provincially. The measures vary depending on whether it is an RRSP or an employer pension plan.

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