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Estimating a group RRSP pension: Brenda's story Add to ...

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:

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  • 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.

Content in this section is provided in partnership with Investor Education Fund, a non-profit organization founded and supported by the Ontario Securities Commission that provides unbiased and independent financial tools to help Canadians make better money decisions. To find out more, go to: GetSmarterAboutMoney.ca

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