I’m 58 and have been on my own for the past 14 years. My ex has been giving me a limited amount of alimony. I’ve tried to save but I only have approximately $230,000. I feel I need at least $1-million to retire comfortably. My youngest child is still living at home. I’m looking for more saving strategies.

We asked Howard Kabot, CFP, vice-president of financial planning and family office services at RBC Wealth Management Canada, to answer this one.

The first question to ask yourself, according to Mr. Kabot, is: why do you feel you need $1-million?

“Have you ‘crunched’ the numbers? If not, then you must do this first before you can understand how much you’ll need to retire comfortably,” he said.

This next set of questions will help you come up with the answer.

How much do you think you will need on an annual basis? Will you be eligible for Canada Pension Plan payments? If you are, Mr. Kabot noted that at age 65 monthly CPP in 2026 can be as high as $1,507. He also pointed out that at age 65 you will be eligible for Old Age Security. In 2026, the monthly OAS amount will be $740 for Canadians aged 65 to 74. Combined, he calculated that the two benefits could account for $27,000 of annual income. Then there’s the income from alimony.

Mr. Kabot suggested exploring options that will help you continue to save. “You’re 58 years of age. Since you’ve asked for more savings strategies, I’ll assume you’re able to save at some level,” he said. “If you’re working, then you can contribute to a registered retirement savings plan. The advantage of contributing to an RRSP versus a regular savings or bank account is twofold: The funds in an RRSP will grow on a tax-deferred basis, and you will get a tax refund based on the contribution made into the account.”

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Another option would be to contribute to a tax-free savings account, Mr. Kabot advised. Like an RRSP, the funds held in a TFSA can grow tax-free. “However, funds can be withdrawn from a TFSA tax-free, whereas funds withdrawn from an RRSP are taxable.” That said, tax refunds are not available on amounts contributed to a TFSA. Under your circumstances, Mr. Kabot recommended using the RRSP to take advantage of the potential tax refund.

The most important question? “When would you like to retire? This will obviously impact the number of years you will be able to put savings into an RRSP, TFSA, non-registered account, etc.,” Mr. Kabot said.

He offered this scenario: “Let’s assume that you will work (and save) for 10 more years. Let’s also assume that you will save $5,000 a year into an RRSP (at a 4-per-cent return on your investment) and the existing $230,000 is also already in that same RRSP. Ten years from now you will have accumulated $400,000. Assuming you will live to age 90, the RRSP will provide you with $25,000 a year in income.”

Combined with CPP, OAS and alimony income, Mr. Kabot noted that this could amount to more than $50,000 in annual income (pre-tax) in retirement. Whether that meets your needs, only you can decide, he added. “If it does, then maybe you don’t need $1-million after all.”

Do you want advice on a financial planning or retirement issue that’s affecting you? Send us an e-mail.