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Figure out how much you'll need

Conventional wisdom suggests you'll need 70% of your pre-retirement income to live comfortably when you retire. However, your lifestyle, expenses, debts and assets – both before and after retirement – may dictate a need for more or less than that amount.

For example, expensive hobbies, dependent children and a mortgage will require a high income replacement ratio, perhaps as much as 100% of your salary at retirement. On the other hand, you may need as little as 50% if you retire soon after paying off your mortgage and children's education.

When calculating your retirement income needs, figure out what you'll need as a percentage of your take-home pay. Remember, your retirement income won't include deductions such as pension contributions, federation dues, employment insurance contributions and long-term disability premiums. And keep in mind that tax deductions are usually less in retirement to reflect your lower income.