Research proves time and time again just how stressful financial worry can be for Canadians. For many people, the thought of retirement is what causes the majority of the concern for their financial future.
We surveyed a few hundred Canadians to understand saving habits when it comes to preparing for retirement. Despite knowing what savings vehicles were available to them (think investment opportunities and regular contributions to registered accounts like RRSPs), the study showed 71% of Canadians don’t know how much they’ll need for retirement.1
That begs the question, how much is really needed to retire? Here are a few realistic figures we’ve put together to keep your retirement planning practical and attainable.
A Realistic Retirement Number
Although there isn’t one number that suits every person, there is a benchmark that was established during our research. One source says that the magic number for retirement savings is $756,000, according to a poll of Canadians.2
The same source explains that many Canadians aren’t sure if they’re saving enough to get to their retirement dream. Which is understandable. For those not near retirement, the idea of retiring can seem too far away to begin to plan for. But retirement planning is an essential part of retiring. Think of it all as a process and while the first step might be setting a goal, the second step would be planning towards that goal in a realistic way. And what’s the third goal? Putting your retirement plan into action.
Realistic Retirement Savings Targets
If you’re in the process of setting a goal for your retirement, you’ll want to also set target contributions to help you get there. You’ll want to come up with a realistic figure annually that lets you enjoy a life similar to the one you lived in your working years and then allocate a practical percentage of your pay to help you move towards your goal. Note that targets are based on many different and personal variables, like what you would define as wants versus needs as well as your residency, timeline and savings.
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To see how much you should set aside for your big retirement day, visit this retirement calculator to run your own numbers.
A Realistic Retirement Income
Based on Statistics Canada 2010 study, the average after-tax income of married elderly couples was $55,900. It’s likely that your retirement income will be constructed of your own personal savings throughout your working years in addition to a mix of government benefits like Canada Pension Plan (CPP) or Quebec Pension Plan and Old Age Security (OAS).
If you’re wondering what other income sources could look like alongside your personal retirement savings, you may be interested in reading What Will My Income Look Like At Retirement? where we explain how CPP and OAS work and what retirement payments look like if you choose to take payments earlier or later than 65.
Nest Wealth is Canada’s digital wealth manager that offers some of the lowest management fees in the country. With sophisticated advice starting at just $20 a month, Nest Wealth helps Canadians reach their financial potential faster and with more wealth. To learn more about Nest Wealth and your investment opportunity, visit www.nestwealth.com.
1Nest Wealth Survey (2018)