Retirement math should feel simple. Typically, you enter details such as your savings, age, and goals into a calculator, which then estimates what you’ll need to retire.
However, a second retirement calculator can give you an entirely different answer. Let’s see why and which one calculation makes the most sense.
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Why do retirement calculators give different answers?
A retirement calculator is mostly a set of assumptions built around compound-interest math.
A U.S. study by Corporate Insight of 12 calculators found “dramatically different” results from identical inputs. The gaps were tied to factors such as taxes, inflation, salary growth, government benefits, investment returns, and the ages used for retirement and life expectancy.
For Canadians, the most important retirement calculation depends on six key levers: expected returns, inflation, life expectancy, pension payouts, taxes, and spending.
How does a small assumption change your retirement number?
Say you invest $100,000 for 25 years and generate average annual returns of 4%. At the end of 25 years, your portfolio value will be around $266,600. At 6%, the value increases to $429,200.
That two-point gap lifts the ending balance by roughly 60%. And that is before inflation or taxes enter the picture.
What return should you assume? FP Canada’s 2026 guidelines
FP Canada and the Institute of Financial Planning publish annual projection guidelines for planners.
The 2026 version forecasts inflation at 2.1% and a fixed-income return of 3.2%. The average annual return estimate for Canadian equities is around 6.3% before fees.
Why CPP assumptions can mislead you
The maximum CPP (Canada Pension Plan) retirement payout at 65 is $1,507.65 a month in 2026. But the average new beneficiary at 65 receives about $858 a month in 2026.
A tool that assumes the maximum payout for everyone overstates what most people will receive.
The retirement calculator I like best: Canada’s Retirement Income Calculator
My pick is the Government of Canada’s Canadian Retirement Income Calculator. It starts from your CPP Statement of Contributions and your OAS residence history. Notably, it does not guess what the “average” Canadian gets.
It is also built for trade-offs. You set an annual income goal and can change inputs such as RRSP (Registered Retirement Savings Plan) contributions or your pension start date to see how the income estimates change in retirement.
However, the page does not spell out its assumptions on returns, inflation, or life expectancy.
So, I treat it as a foundation, then build a savings projection with a second tool where I can change inputs such as investment returns and inflation.
How to stress test any retirement calculator
- Run at least two different retirement calculators. If the answers disagree, find the input that differs.
- Rerun your plan with returns near the FP Canada benchmarks, then again with lower projected returns to have a conservative estimate.
- Enter your own CPP and OAS numbers.
- Check that the results are shown after tax.
- Plan for a long retirement. Set your calculator to run to age 95 or even 100. It may mean saving a little more today, but it protects you from the biggest risk: outliving your money.
Why a blue chip dividend stock fits a retirement plan
One top TSX dividend stock retirees can own is TC Energy (TSX: TRP), which offers a 4.1% yield.
Over the last decade, the energy giant has returned 163% to shareholders, easily outpacing inflation.
TC Energy runs natural gas pipelines and has a major stake in Bruce Power, an Ontario nuclear generator. On its second-quarter 2026 earnings call on July 30, management reported comparable EBITDA (earnings before interest, taxes, depreciation, and amortization) up 12% from a year earlier.
It now expects EBITDA at the upper end of its 2026 range of $11.6 billion to $11.8 billion. The company forecasts EBITDA to grow 6% annually through 2028, which should support future dividend hikes.
The company has also approved about $3 billion in growth projects with an expected return of about 12% per year, after tax and before financing costs.
