Your Income and Take-home pay

For those not in a defined benefit pension plan, your salary will be an important factor in your retirement income. Your salary and take-home pay will be used in two ways:

Any other income you may have from part-time jobs or freelancing will also play an important factor in your retirement for the same reasons.

Firstly, what is Take-Home pay?

Your take-home pay is the amount of money you actually receive from your employer or business. This is usually your gross salary less any deductions.

Some examples of deductions:

The best way to determine your take-home pay is to look at your pay stub or bank account.

How much can you save for retirement?

While your gross salary is used for other financial matters, when looking at saving and cash expenses, your take-home pay is much more meaningful. Your take-home pay, or disposable income, is what we use to figure out how much you can save each month by deducting your normal expenses (mortgage, rent, etc.) from your take-home pay. If your take-home pay is more than your expenses, then you likely can't save any money which means you aren't working towards increasing your retirement income.

Take a look here on a deeper look at how much you need to save for your retirement.

Why do I need an income benchmark?

We use your current take-home pay as your income benchmark because it is assumed that you can live comfortably on your current take-home pay. By assuming this, you then have a goal for how much income you will need to maintain your current lifestyle after you retire. If your current take-home pay is not enough to live on or what you are comfortable living on, then you'll need to adjust this benchmark or goal so that your retirement lifestyle matches your expectations.

You can use MyPRIM to determine how your current retirement picture compares to your current lifestyle. Click here to learn more about this report.

It is good to remember that in retirement, your expenses will most likely decrease. You may have paid off your mortgage or downsized to a lower rent space. You also may not need as much for public transport or gas because you aren't commuting.

How do salary changes affect my retirement?

Salary changes directly effect your retirement as it adjusts both above uses. If we assume that your income stays the same over your career, you won't have an accurate picture of your future.

Your salary can change from multiple circumstances:

Cost of living increases

Most years, your salary will increase due inflation and a higher cost of living. Inflation rates or the Consumer Price Index (CPI) is what drives the Cost of Living Adjustment (COLA). On average, this is around 1 - 2% increase per year.

More information can be found on the government website.

Union Agreement increases

Within most union agreements, there will be guarantees of salary increases in future years. The exact percentage increase and terms will be within your union agreement and will change from job to job.


A promotion represents a large jump in your salary in a single year. This is usually a one-time increase and needs to be accounted for when looking at your retirement picture.

In the MyPRIM report, we account for a potential promotion in determining what your retirement picture looks like. You can input your salary increase and the year in which you expect this increase, so that you can be as accurate about your retirement as possible.

Job Changes

If you expect to change jobs and your salary is expected to change, this is also especially important when looking at retirement. If you change jobs you may get a large increase or even a decrease in salary which can affect your retirement contributions.

If you are leaving a job with a Defined Benefit pension, you will need to know what your pension's commuted value is so that you now whether to leave the money in the plan or not.

MyPRIM and your retirement

In our unique MyPRIM report, you can see how salary changes and take-home pay will affect your retirement.

MyPRIM also measures your retirement income against your current income so you can see if, once you retire, your lifestyle and income may change.

Always seek advice from your financial planner. If you are a member of one of the BC Public Sector Pensions plans, you can see what the Pension Corporation says about your situation. Their pages provide a detailed summary of your options.