How Much Do You Need to Retire?
Your retirement number — and how to get there.
The Quick Answer
A common rule of thumb: you need about 25 times your annual retirement spending saved. This is based on the "4% rule" — withdrawing 4% of your portfolio per year.
📐 Quick Examples
But remember — CPP and OAS reduce how much you need from personal savings!
A More Realistic Calculation
Here's how to think about it step by step:
- Estimate annual retirement spending: Most people need 70% of pre-retirement income. If you earn $80K, plan for ~$56K/year.
- Subtract CPP: Average is ~$10K/year, max ~$16K/year.
- Subtract OAS: ~$8,700/year at full benefit.
- The gap is what you need to fund: $56K - $10K (CPP) - $8.7K (OAS) = ~$37,300/year from savings.
- Multiply by 25: $37,300 × 25 = ~$932,500 in personal savings needed.
How to Get There: Monthly Savings Needed
Assuming 7% average annual return:
| Your Age Now | Years to 65 | Monthly to Save $1M |
|---|---|---|
| 25 | 40 years | ~$380/month |
| 30 | 35 years | ~$555/month |
| 35 | 30 years | ~$820/month |
| 40 | 25 years | ~$1,235/month |
| 45 | 20 years | ~$1,920/month |
💡 The power of starting early:
A 25-year-old needs to save $380/month to reach $1M by 65. A 40-year-old needs $1,235/month for the same goal. Starting 15 years earlier saves you $855/month. Time is your greatest asset.
Where to Save for Retirement
- 1.RRSP: Best if income over $50K (tax deduction now, taxed in retirement when income is lower)
- 2.TFSA: Tax-free withdrawals in retirement, no impact on OAS/GIS
- 3.Employer pension: If available, always contribute enough to get the full employer match
- 4.Non-registered accounts: After maxing RRSP and TFSA
🍁 Canadian Pro Tip
If your employer offers a pension match, that's literally free money. A 5% match on a $60K salary is $3,000/year — or $120,000+ over a career with investment growth. Never leave this on the table.