Last month we looked at the Canada Pension Plan component of My Service Canada Account (MySCA). This service offers a window on a person’s CPP contribution history as well as a snapshot of what pension may be anticipated based on some simple inputs.
In this article, we turn to the federal government’s Canadian Retirement Income Calculator (CRIC). The CRIC combines those CPP figures with other savings information to give a rough sketch of current savings progress and future retirement expectations.
Accessing CRIC
As covered in last month’s article, an option within MySCA is to estimate one’s CPP retirement pension. In the “Notes” section below the calculated figures on the results page, there is hyperlink that can be clicked to move over to the CRIC.
Alternatively, if a person already has the CPP contribution details, the login to MySCA can be skipped. Starting instead at the general Service Canada home page, there are a few routes that can be followed. The most direct is to click on “Retirement Planning” on the left margin “Life Events” list, with the link to CRIC then being shown in the middle column when the page refreshes.
Income sources and output
The usual public and personal retirement income sources are canvassed:
- Old Age Security (OAS)
- Canada Pension Plan (CPP) or Quebec Pension Plan (QPP)
- Employer registered pension plans (RPPs)
- Registered Retirement Savings Plans (RRSPs)
- Other revenue sources such as foreign pensions, business income and rental income
Existing actual figures are to be entered, so on top of the CPP contributions statement, RRSP and RPP statements should also be handy. Some basic sensitivity analysis is available, including adjusting future earnings expectations and savings intentions, comparing results at different retirement/drawdown ages, and projecting potential investment-return rates.
Once all entries are completed, a grid summary is generated that shows monthly income by source in three time frames: under 60, 60 to 64 and 65+. To assist understandability, figures are expressed in today’s dollars, and there is a brief discussion of why and how required income in retirement may be less than during working years.
Evaluating the results
The whole process is suggested to take “approximately 30 minutes,” which is indeed quite manageable. Keep in mind that, as with any retirement income calculator, the reliability of the output is dependent on the quantity and quality of the input. With this in mind, three aspects of the calculator warrant specific mention.
First, the CRIC operates on an individual basis, which is to say that for those who are married or living in a common-law relationship, each person must use the calculator separately and compare results to understand the overall situation. No guidance is given as to how to approach this comparison.
Second, there is a separate calculator for the new post-retirement benefit for people who work while receiving a CPP retirement pension. Apart from this being a novel concept to comprehend, it is unfortunate that the results are not integrated within the main model.
Third, generally entries are requested and results expressed in pre-tax dollars. Of course the translation of this into spendable cash would depend on income level, the arithmetic for which would be a tall task for a significant proportion of the population. Furthermore, there are no instructions on how to address tax-free savings accounts, being after-tax at both the savings and drawdown stages. Indeed, there is no mention of the TFSA at all as far as I could find – a significant omission.
These limitations in mind, it remains a worthwhile exercise to gather financial information, review savings habits and consider potential retirement implications. In that context, the CRIC can be a useful tool to shed light on retirement issues and to motivate action, but the results should ideally be reviewed with a professional familiar with financial planning matters before any actual steps are undertaken.
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Reference MySCA web address: www.servicecanada.gc.ca/eng/online/mysca.shtml