TORONTO, ONTARIO--(Marketwire -02/10/12)- As the February 29th deadline approaches to make a contribution to a Registered Retirement Savings Plan (RRSP) and as part of its ongoing commitment to improving financial literacy, BMO Financial Group will be providing daily retirement tips during the month of February from BMO Retirement Institute Head Tina Di Vito's new book 52 Ways To Wreck Your Retirement...And How To Rescue It.

Tip Number Nineteen:

Recognize the effects that inflation will have on retirement income

Understanding how inflation can impact your retirement lifestyle. Inflation is a measure of the rise in the price of goods and services over time. It is calculated by Statistics Canada based on the basket of approximately 600 goods and services called the Consumer Price Index (CPI). Although most recently inflation has been very low, it is important to understand that not all of the items in the basket of goods in the CPI go up by the same amount, and every individual is impacted differently by inflation based on what they buy within the basket of goods.

It is important to take inflation into consideration when planning for retirement as your nest egg may lose value over time - during your working years and in retirement - if not secured in an investment vehicle that ensures your savings are growing at a rate higher than inflation.

Tip Number Twenty:

Determine the size of your nest egg and how much is enough for you

To determine how much you will need to save for retirement, base it off of your current lifestyle, your desire to maintain or alter this during retirement and how much it will cost to sustain that standard of living. It is important to ask yourself the difficult questions regarding retirement. Be honest with yourself about how much you currently have saved, what you can expect from government and company pension plans, the number of years you plan to be in retirement, etc. Also be aware that there are a lot of unknowns that require contingency planning, such as life span, inflation, health care needs, market volatility and place of residence, that will impact how much is enough for you to sustain your desired lifestyle.

For more information on retirement: http://www.bmo.com/retirement

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BMO Retirement Tips of the Day: Understand the Impact of Inflation and Determine How Much Is Enough