Brenda has worked at her company for 25 years. Ten years ago, the company introduced a Group RRSP. Ever since, Brenda has contributed 5% of her $50,000 salary, for a total of $2,500 each year. Her company also contributed $2,500. The contributions are made in monthly installments.
Now Brenda wants to estimate the income she’ll have when she retires in 10 years. She assumes:
- Both she and her company will continue to make the same contributions ($5,000 a year)
- Her investments will make 5% each year.
The result: Brenda will have around $170,000 in her Group RRSP at retirement. This will give her a monthly pension of around $1,000, before taxes. If she saved on her own, without the company matching her contributions, she would have had only $85,000 in her plan before she retired.
Note: This example above is for simple illustration only. It does not reflect any tax savings or the impact of inflation and salary increases on contributions.
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