Charting Retirement is a weekly snapshot of retirement-related data.
If you contribute to a pension plan, you want to get back at least what you put into it, after taking into account interest, life expectancy and income tax. In the case of employees, the Canada Pension Plan (CPP), and in Quebec, the Quebec Pension Plan (QPP), meet this basic test. The self-employed, however, would be better off in an RRSP since they must contribute twice as much to CPP as employees do.
The chart below focuses randomly on men. High income is defined as roughly above $200,000 and middle income is about $100,000.
(Source: Calculations by Frederick Vettese: Average wages assumed to rise by 3.2 per cent a year and CPI by 2.2 per cent a year. Present values are calculated using a 3-per-cent real rate of return.)
Frederick Vettese is former chief actuary of Morneau Shepell and author of Retirement Income for Life.