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Let's hit the mute button on the annual RRSP gabfest for a moment to talk about the most important retirement savings question of them all.

How financially prepared are you for your retirement years?

If you don't have an answer, this column's for you. We're going to look at online retirement savings calculators, which are one of the best financial tools you'll find on the Internet. No, they're not definitive and, no, they don't replace the advice of a financial planner. But in 30 to 45 minutes, they'll make you a lot smarter about an important part of your life than you were before.

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Here are some top calculators. Visit a few to get the most comprehensive answer to the question of how you're doing on retirement saving.

Start here

From: Service Canada, a federal government agency

Lowdown: If you have time for just one of these calculators, this is it. Whoever designed it did an A-plus job of combining simplicity and thoroughness in a tool that will help anyone who wants a snapshot of what their financial situation in retirement might look like.

What it will do for you: Walk you through all the various components of retirement saving to see what you'll have at the end. You'll find out how much Old Age Security you'll get and, if you don't know your Canada Pension Plan entitlement, this calculator will help you estimate it. From there, you'll have the opportunity to add any company pension you have and your own savings in a registered retirement savings plan (tax-free savings accounts aren't mentioned - update needed). Next, you'll plug in the amount you're currently saving, and your expected rate of return. The final result will show you how much annual income you'll have for any lifespan you choose.

This is a great calculator for playing around with variables like your expected rate of return, the number of years you'll live and the benefits of saving more for retirement.

For young adults

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Lowdown: Curious to know how your ultimate RRSP savings will be affected if you start contributing now instead of waiting? This is the calculator for you.

What it will do for you: Clearly shows the benefits of getting money into an RRSP early and letting it compound for decades. You'll also clearly see the potential benefits of taking on more risk to earn a higher rate of return.

For people who have some time until retirement and want to know how they're doing

From: The financial planning firm Fiscal Agents

Lowdown: This calculator was adapted from the book The Pension Puzzle, written by Bruce Cohen and Brian Fitzgerald, and it's very useful for analyzing how much more work you may have to do to reach your retirement goal.

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What it will do for you: Allow you to add up all your sources of retirement income and see if they'll achieve the level of retirement income you want. There's all kinds of flexibility in this calculator - you can plan for working in retirement and add different sources of pension income. At the end, you'll either be told you're on track to achieve your target level of retirement income or that you need to save more. If you get the latter answer, you'll be shown how much you need in total and how much you need to save this year.

From Russell Investments, a global investment company with offices in Canada.

Lowdown: Russell has done some research showing that as much as 60 per cent of your retirement income can come from growth in your portfolio that happens after you leave the work force. This calculator is designed to document how this may play out with your retirement savings.

What it will do for you: Show you what your RRSP will be worth when you retire, based on savings to date and annual savings to come, and how much of an annual income you can expect if you live to age 87. You can adjust variables like investment rates of return before and after retirement.

For people close to retirement


Lowdown: Useful for people who have a sum of money saved for retirement and want to know how long it will last.

What it will do for you: Let you play around with different rates of return and withdrawal rates to see how many years you'll have until your money is depleted. You can compare two scenarios side by side.


How to get the most out of online retirement tools

Be Prepared:

Have your latest company pension statement handy and make sure you know how much you're contributing to RRSPs and how much your savings are worth.

Be Realistic:

An expected rate of return of 6 or 7 per cent is as high as you'll want to go in projecting growth of your savings, and remember that some financial planners believe 90 is a good default age for setting your expected lifespan.

Don't be bullied:

Some calculators work on the idea that you need to save enough to replace 70 per cent of your working income, even while it's possible to live comfortably on less than that.

Don't be gullible:

A calculator that doesn't mention CPP and OAS may overstate how much you need to save.

Don't be discouraged:

Many options exist for those who haven't saved enough, including ramping up your savings, retiring later and adjusting your mix of investments.

Alexandra Macqueen, a certified financial planner and co-author of Pensionize Your Nest Egg, answers your retirement questions Tuesday on my Facebook page, Rob Carrick - Personal Finance.

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